Real Estate Marketing & Beyond
The latest data released by RealtyTrac® for May 2015 shows that 24.6% of all single family homes and condominiums sales for May were purchased with cash. This compares to 28.5% for April and 30.4% a year earlier, showing all cash sales have now reached their lowest level since November 2009.
This means the cash sales share of the market for May was closer to the long-term average which dates back to January 2000, at 24.8% and is far below the peak reached in February 2011 when 42.2% of property was bought for cash. The latest report also shows that the share of institutional investors who purchased at least 10 properties during a 12 month period fell to 2.4% of single family home sales. This is a record low.
Experts point out that this is a good thing for homebuyers looking to move up the property market or for first-time buyers, particularly as interest rates are still historically low. In addition, competition for property is also different. Even though inventory is tight in many areas, investors have largely dropped out of the market and cash deals are not quite so likely to occur. This means listings are less likely to incur multiple offers, which of course is good news for first-time buyers.
In May the median sales price of residential property was $173,900, an increase of 4% from April but a decrease of 1% compared to a year earlier. This price includes distressed and non-distressed properties. May was also notable for being the second consecutive month when median sales prices went down year on year compared to 36 consecutive months of year on year increases.
The number of distressed sales in May was significantly smaller but in spite of this distress sales are still dragging down property prices and tend to sell at a median price that is 43% below the median price of a property that isn’t a distressed sale. Overall the real estate market is changing from one that had been largely investor driven to a market that is more dependent on traditional buyers. It’s expected that sales volumes for this year will hit the highest levels seen since 2006. At the same time the balance between supply and demand is becoming more favorable for buyers as banks are beginning to get rid of some of their more highly distressed real estate.
The median sales price for residential property that was not in foreclosure or a distressed sale was $205,000 in May compared to a price of $116,192 for property that was in some stage of foreclosure or which was owned by the bank.
