The share of distressed sales dropped to a new low of 10.5 percent in May, down from 15.4 percent in April and down from 18.3 percent a year ago to the lowest level since January 2011 — the earliest that RealtyTrac has data for this metric.
“The South Florida real estate market is the healthiest and most balanced in a decade. Real buyers and real sellers are back as we see the investor and distressed market fade,” said Mike Pappas, CEO and president of Keyes Company covering the South Florida market. “Our affordability factor is still strong due to reasonable pricing and low interest rates. With our economy strengthening on all fronts our future looks bright.”
Metro areas with a population of at least 200,000 with the highest share of distressed sales were Flint, Michigan (26.0 percent), Tallahassee, Florida (24.2 percent), Memphis, Tennessee (24.1 percent), Pensacola, Florida (23.0 percent), and Ocala, Florida (21.7 percent).
“The market has shifted. In 2010, almost 30 percent of all listings in the Seattle area were distressed — either REO or subject to a short-sale — and today the figure about one-third of that. Although, still running at above historical averages, the decline in distressed sales is not surprising given that we continue to see a decline in these listings,” said Matthew Gardner, Chief Economist Windermere Realty covering the Seattle market. “Moreover, when we look at the decline in institutional investors — as well as all cash buyers — this is a sign that Seattle home prices have escalated to a point that it is increasingly difficult for these buyers to see significant returns on their investments.”
Bank-owned sales accounted for 3.9 percent of all residential property sales in May, down from 6.9 percent in the previous month and down from 9.0 percent a year ago to the lowest level since January 2011.
Metros with the highest share of REO sales were Flint, Michigan (16.0 percent), Mobile, Alabama (13.1 percent), Tallahassee, Florida (12.6 percent), Palm Bay-Melbourne-Titusville, Florida (11.9 percent), and Fayetteville, North Carolina (11.9 percent).
Properties that sold while in the foreclosure process — but not yet bank-owned — accounted for 6.6 percent of all residential property sales in May, down from 8.5 percent the previous month and down from 9.2 percent a year ago to the lowest level since January 2011.
Metros with the highest share of in-foreclosure sales were Chicago (14.8 percent), Rockford, Illinois (14.6 percent), Toledo, Ohio (13.4 percent), New Haven, Connecticut (12.7 percent), and Memphis, Tennessee (12.7 percent).
“While housing demand has remained high across much of Ohio, there are communities where we have noticed year-over-year decreases in foreclosure inventory, coupled with year-over-year decreases in institutional and cash sales, creating a slight decrease in pending sales and median prices for the month of May,” said Michael Mahon, president at HER Reaaltors covering the Cincinnati, Dayton and Columbus markets in Ohio.
Markets with highest share of cash sales and institutional investor sales
The top five metro areas with a population of at least 200,000 with the highest share of cash buyers were all in Florida: Naples-Marco Island (56.0 percent), Sarasota-Bradenton, (54.0 percent), Miami (53.4 percent), Ocala (49.9 percent), and Cape Coral-Fort Myers (49.7 percent).
“As expected the market is leveling after a great run. All cash buyers, a typical harbinger of lofty markets, are down a few ticks signaling another metric drop of demand. Another leading indicator for us, institutional buying was down in May too,” said Mark Hughes, chief operating officer with First Team Realty , covering the Southern California market where cash buyers dropped to 22.8 percent in May. “On the other side of the scale distressed homes as a percentage of total market continues to fall while the price percent below median sales price for distress sales increased. All of these metrics point to a cooling market, trending toward what we believe is a more balanced and healthy market track.”
The top five metro areas with a population of at least 200,000 with the highest share of institutional investor purchases were Rockford, Illinois (13.4 percent), Tulsa, Oklahoma (12.6 percent), Roanoke, Virginia (12.6 percent), Memphis, Tennessee (10.2 percent), and San Antonio, Texas (8.4 percent).
All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.
Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in a calendar year.
Distressed sale: a sale of a property that occurs while the property is actively in some stage of foreclosure (NOD, LIS, NTS, NFS or REO). This includes only sales to third-party buyers or investors not involved in the foreclosure process. It does not include property transfers from the owner in default to the foreclosing bank or lender.
REO sale: a sale of a property that occurs while the property is actively bank owned (REO).
In-foreclosure sale: a sale of a property that occurs while the property is actively in default (NOD, LIS) or scheduled for foreclosure auction (NTS, NFS). Source: RealtyTrac