Even as Distressed Sales Fall; All-Cash Buying Increases

Even though sales to investors and salesrnof distressed homes have declined the National Association of Realtors® (NAR) reportsrnthat all-cash sales continue to climb. rnAccording to Lawrence Yun, NAR’s chief economist, these findings arerncounterintuitive and may indicate other changes are underway in the market.</p

NAR’s Realtors® Confidence Index surveyrnconducted each month among about 3,000 of its members, indicates all-cash homernpurchases rose from 29 percent in 2012 to 31 percent last year and accountedrnfor 33 percent in the first quarter of 2014.  That same survey showed investors, who arerntypically the source of many of the all-cash transactions edged down from 20rnpercent of buyers in 2012 to 19 percent in both 2013 and the first quarter ofrnthis year.  </p

A second NAR study conductedrnamong consumers, the 2014 Investment and Vacation Home Buyers Survey, showsrninvestors at a somewhat higher market share, but declining more sharply from 24rnpercent in 2012 to 20 percent in 2013.</p

The Realtor survey also showedrndistressed home sales declining from 26 percent of the national market in 2012rnto 17 percent in 2013 and 15 percent in the first quarter of 2014.  NAR projects that those sales will be inrnsingle digits by the fourth quarter of this year. </p

The Realtor group said the surveyrnprovided sufficient data to break information out on a state level for 29rnstates and to break out all census regions with information for everyrnstate.  </p

In Florida more than half of all homesrnwere purchased with cash with very little change in the level of those salesrnfrom 2012 to the present.  Yet distressedrnhome sales declined from nearly four in 10 purchases in 2012 to three in 10rnduring 2013, and investor transactions edged down.</p

All cash sales exceeded 40 percent inrnseveral other states including Nevada, Arizona and West Virginia.  Among the 29 states for which complete datarnwas available the lowest levels of cash sales in the first quarter werernreported in Maryland (17 percent) Colorado (19 percent) and Oregon (21rnpercent).  Those states had posted allrncash shares that were 4, 2, and 6 percentage points higher respectively inrn2013.</p<p "These findings beg the question as to whyrnwe’re seeing higher shares of cash purchases,” Yun said. “The restrictivernmortgage lending standards are a factor, but the higher levels of cash salesrnmay also come from the aging of the baby boom

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