U.S. home sales dipped in February compared to January, due mainly to a drop in distressed sales and a corresponding decline in investor activity, according to RealtyTrac's Residential and Foreclosure Sales Report.
Single-family homes, condominiums and townhouses sold at an estimated annual pace of 5,083,241 in February – a 0.2% decrease from the previous month but still up 7% from a year ago. It was the fourth consecutive month that sales activity decreased on a month-over-month basis, according to the report.
Driving the decrease in February was a drop in distressed sales – including foreclosures, short sales and real estate-owned (REO) sales. As a result of the major decrease in the number of foreclosed and/or bank-owned properties on the market, demand from institutional investors is starting to wane. As a result, investors are no longer stimulating the housing market to the degree they were a year ago.
‘Supply and demand have reached a bit of a standoff in this uneven real estate recovery,’ says Daren Blomquist, vice president at RealtyTrac, in a release. ‘The supply of distressed properties – which buyers and investors have come to rely on over the past few years – is evaporating quickly in most markets, but that dwindling supply is not being adequately replenished by non-distressed homeowners listing their homes or by new homes being built.
‘Meanwhile, a key source of demand over the past two years – institutional investors purchasing single-family homes as rentals – is starting to decline, and it's not yet clear if that diminishing demand will be filled by first-time home buyers and move-up buyers,’ Blomquist adds.
According to the report, distressed sales accounted for 17% of all sales in February, up from 16.1% of sales in January but down from 19.1% of sales in February 2013. Short sales accounted for 5.7% of all sales, up from 5.5% in January but down from 6.9% a year ago. Metro areas with the highest percentage of short sales included Las Vegas (17%); Orlando, Fla. (16.8%); Tampa, Fla. (14.9%); Memphis, Tenn. (14.5%); and Miami (12.3%). The percentage of short sales decreased from a year ago in all of these metros.
Sales at public foreclosure auctions accounted for 1.5% of all sales nationwide in February, up from 1.3% in January and up from 1.1% in February 2013. About 97% of all sales at foreclosure auctions in February were all-cash, according to the report. About 35% of all sales at foreclosure auctions were to institutional investors.
The report shows that 81% of all properties liquidated through foreclosure auctions sold for $200,000 or less.
Institutional investors – defined as individuals or entities that have purchased at least 10 properties in a calendar year – accounted for 5.9% of all U.S. residential property sales in February, up from a revised 5% in January but down from 7.2% in February 2013. February was the third consecutive month where the institutional investor share of sales declined on a year-over-year basis after 19 consecutive months of year-over-year increases.
According to the report, 91% of all institutional investor purchases in February were all-cash.
About 17% of all institutional investor purchases were properties in foreclosure or REO.
About 81% of all institutional investor purchases were properties priced $200,000 or lower.
What's more, roughly 63% of all institutional investor purchases were properties with between 1,000 and 2,000 square feet – and about 55% were properties built in 1990 or later.
Metropolitan areas that saw the highest share of institutional investor purchases in February included Atlanta (25.2%); Columbus, Ohio (21.4%); Knoxville, Tenn. (18.2%); Phoenix (15.2%); and Cape Coral-Fort Myers, Fla. (14.8%).
All-cash sales (whether investor or not) accounted for 43.3% of all sales in February, up from a revised 42.1% in January and up from 20.2% in February 2013. February was the eighth consecutive month that cash sales accounted for 35% or more of all sales nationwide, according to the report.
About 12% of all cash sales were to institutional investors. About 15% were properties in foreclosure or REO – and about 67% were properties priced $200,000 or lower.
Metro areas where cash sales represented more than 50% of all sales included Miami (71.3%), Tampa (65.9%), Orlando (62.3%), Las Vegas (59.5%), New York (57.1%), Atlanta (56.7%) and Detroit (56.0%).
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