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Cash Sales Reach New High in November

DEC 20, 2013 11:08am ET
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The housing market recovery was driven by investors and cash purchasers in November, as the share of all-cash purchases reached a record high.

All-cash acquisitions accounted for 42% of the 5.1 million residential sales during November, according to data from RealtyTrac, which is the most since the Irvine, Calif.-based firm began tracking these statistics in January 2011. The latest monthly numbers are up 38.8% from the previous month.

The highest percentage of cash sales occurred in Florida, Georgia, Nevada, South Carolina and Michigan, which respectively were 62.7%, 51.3%, 51%, 50.3% and 49%.  

Meanwhile, a greater number of institutional investors bought single-family homes, condominiums and townhomes this November compared to the prior month and a year ago. Of the 5,146,565 residential sales that were completed in November, 7.7% of these transactions were finalized by investors, up 7.1% from October and 6.3% from a year earlier.

Markets with the highest share of institutional investor purchases during November were Phoenix, Atlanta, Jacksonville, and Columbus, Ohio.

“Lenders are taking advantage of this environment to unload more of their bank-owned inventory and in-foreclosure inventory at the foreclosure auction,” said Daren Blomquist, vice president at RealtyTrac. “But as the backlog of distressed inventory available dries up in many of the markets with the most efficient foreclosure processes—namely California, Arizona and Nevada, with Georgia not far behind—overall sales volume is declining and will continue to do so until more nondistressed sellers enter the market.”

Sales of REO homes were up for the third straight month and made up 10% of all residential property transactions in November. Additionally, short sales represented 5.6% of the overall sales volume, which was up only 2 basis points on a monthly basis but down year-over-year from 6.5%.

The national median sales price of all residential properties was $169,000, RealtyTrac says, a 7% increase from November 2012. This represents the 19th consecutive month where median home prices have risen on an annualized basis.

“Credit tightening will occur in January 2014 due to the Dodd-Frank legislation, which I expect will cause home sales to decrease marginally,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty. “This legislation is positive for the long term to ensure we don’t experience another big home default mess, but I hope this is the last tightening we experience because as the lenders continue to tighten their loan criteria, it will begin to have a detrimental effect on the housing market and in turn the economy.”

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