Short Sales, REOs Account for 25% of Residential Sales in August
The recovery in home prices and sale volume continues to be driven in large part by cash buyers and institutional investors.
According to data from RealtyTrac, U.S. residential properties, including single-family homes and condominiums and townhomes, sold at an estimated annualized pace of 5.6 million in August. This is 2% more than the 5.5 million selling pace seen during the prior month and is up 12% on a yearly basis.
Out of this 5.6 million pace, all-cash purchases represented 45% of the overall volume, which is an increase from 39% in July and 30% from a year ago. Among metropolitan areas with a population of at least 1 million, all-cash sales were most common in Miami, Detroit, Las Vegas, Jacksonville and Tampa.
Meanwhile, institutional investors who bought 10 or more properties over the last year accounted for 10% of all sales transactions in August. These types of buyers were dominant forces in the Memphis, Jacksonville, Atlanta, St. Louis and Detroit areas.
Furthermore, short sales and bank-owned sales combined made up one in every four sales nationwide. Short sales accounted for 15% of all residential sales in August, up from the prior month and year ago totals, which were 14% and 8%, respectively.
States with the biggest percentage of short sales were Nevada at 34%, Florida was 29%, Ohio at 23%, Maryland at 21%, and Tennessee and Michigan both were 20%.
“The increase in short sales in August in the mid-Tennessee market is due to the banks’ lengthy short sale approval process. We could see this level out in the coming months,” said Bob Parks, CEO of Bob Parks Realty. “The continuous rise in interest rates has had an effect on the housing market with refinancing slowing as it typically does when rates go up. However, we are experiencing a great period of growth and stability in Tennessee.”
Additionally, REO sales in August consisted of 10% of all residential transactions, which is 1% higher than the month before and the same time period last year. REO purchases were most prominent in Nevada (22%), Ohio (17%), Arizona (17%), Michigan (16%), Illinois (14%) and California (14%).
Throughout the country, the national median sales price in August increased month-over-month by 3% and now stands at $175,000. Also, this figure was up 6% on an annual basis, therefore marking the 17th consecutive month where median home prices increased year-over-year.
The Irvine, Calif.-based analytic firm noted that the intermediate figure to sell a distressed residential property—in foreclosure or bank-owned—was $116,000, which is down 3% from August 2012.
“Seven years after the housing bubble burst, U.S. home prices are clearly on the rise again, up 23% from the bottom in March 2012, although still 26% below the peak of the housing price bubble in August 2006,” said Daren Blomquist, vice president at RealtyTrac.