Cash sales hit new high

by MPA12 May 2014
All-cash sales reached a new high in the first quarter even as the share of institutional investor purchases sank to its lowest level since 2012, according to newly released data.

According to RealtyTrac’s Institutional Investor and Cash Sales Report, 42.7% of all US residential property sales in Q1 were all-cash purchases. That’s up from 37.8% in Q4 of 2013 and up from 19.1% in the first quarter of 2013.

Institutional investors – defined as entities that have purchased at least 10 properties in a calendar year – made up 5.6% of all US residential sales in Q1, down from 6.8% in the fourth quarter of 2013 and the lowest since the first quarter of 2012.

“Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, vice president at RealtyTrac. “The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers — including individual investors, second-home buyers and even owner-occupant buyers — to fill the vacuum of demand left by institutional investors.

“While the institutional investor purchase share declined in the first quarter in 18 of the top 20 markets for institutional investor share a year ago, home prices continued to appreciate in most of those markets, albeit at a slower pace in many cases,” Blomquist added. “There are a couple notable exceptions that could be cause for concern: Jacksonville, Fla., where the institutional investor share of purchases was down to 13.5 percent in the first quarter compared to 18 percent a year ago and where median home prices decreased 1 percent from a year ago in March after 15 consecutive months of annual increases; and Greensboro, N.C., where the institutional investor of purchases was down to 6.4 percent in the first quarter compared to 10 percent a year ago and where median home prices decreased 8 percent from a year ago in March following 14 of 16 months were median home prices increased annually.”

The large metro areas with the highest percentage of cash sales were all in Florida. Cape Coral-Fort Myers, Fla., saw the largest share of cash sales at 73.6%, followed by Miami (67.1%), Sarasota (65.1%), Palm Bay (64.1%) and Lakeland (61.8%). Cash sales accounted for more than 50% of all homes sold in several other metro areas, including New York (57%), Columbia, S.C. (56.1%), Memphis (54.9%), Detroit (53.5%), Atlanta (53.2%) and Las Vegas (52.2%).


  • by Wm Matz | 5/12/2014 11:29:46 AM

    For primary residences and 2d homes, there is a tax trap lurking for unwary all-cash buyers. Buyers who later decide that they need cash and refi will be shocked when they visit their CPA [or IRS] and learn that most or even all of their mortgage interest is not tax deductible, as deductibility is primarily determined by "acquisition indebtedness".


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