FHA Buyer Share of Home Sales at Two-Year High in Q2 2015 as All-Cash Buyer Share Drops to 82-Month Low in June

Single Family Home and Condo Sales Volume Through April at Nine-Year High;
First-Half 2015 Sellers Realizing Biggest Home Price Gains Since 2007;
Distressed Sales at New Low in June, Institutional Investor Share Matches Record Low

IRVINE, Calif. – July 23, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its June and Midyear 2015 U.S. Home Sales Report, which shows distressed sales, cash sales and institutional investor sales in June were all down from a year ago to multi-year lows even as sales to first-time homebuyers and other buyers using FHA loans increased compared to a year ago in June and reached a two-year high in the second quarter.

Buyers using Federal Housing Administration (FHA) loans — typically low down payment loans utilized by first time homebuyers and other buyers without equity to bring to the closing table — accounted for 23 percent of all single family home and condo sales with financing — excluding all-cash sales — in the second quarter of 2015, up from 20 percent in the first quarter and up from 19 percent in the second quarter of 2014 to the highest share since the first quarter of 2013.

The report also shows 914,291 single family and condo sales through April 2015 — the most recent month with complete sales data available — at the highest level through the first four months of a year since 2006, a nine-year high.

“As the investor-driven housing recovery faded in the first half of 2015, first-time homebuyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack,” said Daren Blomquist, vice president at RealtyTrac. “This is good news for sellers in many markets, providing them with strong demand from a larger pool of buyers, and U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007. In June sellers sold for above estimated market value on average for the first time in nearly two years.

“Higher-value markets with a larger share of homes priced above the loan limits set by FHA and Fannie and Freddie Mac are the most likely to struggle in the second half of the year as the recovery continues to become more dependent on traditional buyers relying on financing,” Blomquist noted. “The health of these high-priced trophy markets will in many ways be tied more to global economic forces driving foreign cash buyers than U.S. economic and real estate fundamentals.”

Cash buyers down nationwide, up in New York City and 20 other markets

All-cash buyers accounted for 22.9 percent of all single family home and condo sales in June, down from 24.7 percent of all sales in the previous month and down from 29.1 percent of all sales in June 2014 to the lowest share of monthly cash sales nationwide since August 2008. The June cash sales share was almost half the peak of 42.1 percent in February 2011.

Metros with highest share of cash sales in June were Homosassa Springs, Florida (53 percent), Naples-Marco Island, Florida (52 percent); Miami (50 percent); Sebastian-Vero Beach, Florida (50 percent); and New York (49 percent).

“The first six months of sales in South Florida have been at a record pace. The millennials are entering the market along with many homebuyers who had difficulty during the last recession while the investor market has quieted,” said Mike Pappas, CEO and president of Keyes Company, covering the South Florida market. “It is a real market with real buyers and sellers. The buyers have many lending options and are still enjoying low interest rates and many sellers are selling at their peak prices.”

In New York and 20 other markets analyzed for the report, the share of cash sales increased from a year ago, counter to the national trend. The New York metro share of cash sales increased from 40 percent in June 2014 to 49 percent in June 2015. Other markets with an increasing share of cash sales included Raleigh, North Carolina; Greenville, South Carolina; Bellingham, Washington located between Seattle and Vancouver, Canada; Knoxville, Tennessee; Providence, Rhode Island; and San Jose, California.

“Cash buyers have been a significant player in the Seattle housing market over the past 18 months, but the modest drop in this buyer segment doesn’t come as a surprise given the aggressive rise in home prices in recent months,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Higher prices are forcing these buyers to dig deeper into their pockets and this process has started to push some out of the market. The same can be said for first time buyers; many of them are having a hard time qualifying for a loan also due to the rise in home prices in Seattle.”

“Particularly, in the first-time home buyer market, we are seeing multiple offers and in many cases sellers are choosing the cash offer over FHA or conventional financing,” said Greg Smith, owner/broker at RE/MAX Alliance, covering the Denver market in Colorado.  “This can skew the numbers of the actual makeup of buyers in the marketplace.  As we continue to see the market move towards equilibrium we should continue to see the FHA numbers grow and a slight decrease in cash buyers.”

Institutional investor share in June matches record low

Institutional investors — entities purchasing at least 10 properties during a calendar year — accounted for 1.7 percent of all single family and condo sales in June, the same share as in May but down from 3.5 percent of all sales in June 2014. The 1.7 percent share of institutional investor sales in May and June was the lowest monthly share going back to January 2000 — the earliest data is available — and was less than one-third of the monthly peak of 6.1 percent in February 2013.

Metro areas with the highest share of institutional investor sales in June 2015 were Macon, Georgia (10.2 percent); Columbia, Tennessee (9.5 percent); Memphis, Tennessee (8.7 percent); Detroit (7.8 percent); and Charlotte (5.3 percent).

Other major metros with a high percentage of institutional investor sales included Tampa (4.3 percent); Atlanta (4.0 percent); Tulsa, Oklahoma (3.9 percent); Oklahoma City (3.7 percent); and Nashville (3.7 percent).

The share of institutional investors increased from a year ago in just four markets: Detroit; Macon, Georgia; Lincoln, Nebraska; and Birmingham, Alabama.

Distressed sales drop to new record low

Distressed sales — properties in the foreclosure process or bank-owned when they sold — accounted for 8.0 percent of all single family and condo sales in June, down from 10.6 percent of all sales in May and down from 19.0 percent of all sales in June 2014 to the lowest monthly share since January 2011 — the earliest that data is available. The share of distressed sales reached a monthly peak of 45.9 percent of all single family and condo sales in February 2011.

Metro areas with the highest share of distressed sales in June were Salisbury, North Carolina (30.6 percent); Gainesville, Georgia (23.8 percent); Jacksonville, North Carolina (22.2 percent); Boone, North Carolina (22.1 percent); and Marion Ohio (21.9 percent).

Major metro areas with a high share of distressed sales in June included Chicago (14.7 percent); Baltimore (14.4 percent); Orlando (13.8 percent); Jacksonville, Florida (13.6 percent); and Memphis (13.4 percent).

Markets with highest and lowest share of FHA loan purchases in first half of 2015

Nationwide, buyers using FHA loans accounted for 22 percent of all financed sales in the first half of 2015, up from 19 percent of all sales in 2014 and up from 20 percent of all sales in 2013.

Among markets with a population of 1 million or more, those with the highest share of buyers using FHA loans in the first six months of 2015 were Riverside-San Bernardino-Ontario in inland Southern California (35 percent); Las Vegas (32 percent); Oklahoma City (31 percent); Salt Lake City (30 percent); and Phoenix (29 percent).

“Low interest rates and FHA loan availability continue to help the first time market place,” said Craig King, COO at Chase International brokerage, covering the Lake Tahoe and Reno, Nevada, markets. We have very limited inventory in the under 300,000 market price range. This indicates strong interest from first time buyers. Those first time buyers are also creating a move up market place.”

Major markets with the lowest share of buyers using FHA loans in the first six months of 2015 were San Jose, California (7 percent); Hartford, Connecticut (10 percent); San Francisco (12 percent); Boston (12 percent); and Milwaukee (13 percent).

First-half 2015 sellers realized highest home price gains since 2007

Single family home and condo sellers in the first half of 2015 sold for an average of 13 percent above their original purchase price, the highest average percentage in home price gains realized by sellers since 2007, when it was 30 percent.

Major markets where sellers in the first half of 2015 realized the biggest average home price gains were San Jose, California (41 percent); San Francisco (37 percent); Denver (29 percent); Portland (25 percent); Los Angeles (25 percent); and Seattle (20 percent).

“Sales activity has been strong this year and the metrics point to a solid foundation for steady growth.  Growing boomerang buyer interest and first time buyer participation combined with smarter lending requirements are fostering a sustainable market,” said Mark Hughes, chief operating officer with First Team Real Estate, covering the Southern California market. “Lower investor, cash, and distressed activity are three reliable indicators that peripheral buying and selling activity is settling back down and the traditional owner occupied residential market is back on solid ground and healthy.”
There were six major markets where sellers in the first half of 2015 on average sold below their original purchase price: Chicago (7 percent below); Cleveland (7 percent below); Hartford, Connecticut (3 percent below); Jacksonville, Florida (2 percent below); St. Louis (1 percent below); and Orlando (1 percent below).

Homes sold in June sold above estimated market value on average

Single family homes and condos in June sold for an average of $291,450 compared to an average $287,634 estimated market value for those same homes at the time of sale — a 101 percent price-to-value ratio. June was the first time since July 2013 that the national price-to-value ratio exceeded 100 percent.

Major metro areas with the highest price-to-value ratios — where homes sold the most above estimated market value — were San Francisco (106 percent); Hartford, Connecticut (105 percent); Baltimore (105 percent); Rochester, New York (104 percent); and Providence, Rhode Island (103 percent).

Other major markets with price-to-value ratios above 100 percent in June included Washington, D.C. (103 percent); Phoenix (103 percent); Sacramento (103 percent); Portland (103 percent); Seattle (102 percent); San Jose (102 percent); and St. Louis (102 percent); 

Sales volume at highest level since 2006 in 16 percent of markets analyzed

The number of single family homes and condos sold in the first four months of 2015 were at the highest level in the first four months of any year since 2006 in 43 out of 264 (16 percent) metropolitan statistical areas with sufficient home sales data. Markets at nine-year highs included Tampa, Denver, Columbus, Ohio, Jacksonville, Florida, and San Antonio.

There were 23 markets where sales volume in the first four months of 2015 was at 10-year highs, including Denver; Columbus, Ohio; San Antonio; Tucson, Arizona; and Palm Bay-Melbourne-Titusville, Florida.

“As we reach the midyear point across the Ohio markets, the best description would include the words robust and balanced. With double-digit sales growth, increasing home prices, and increasing employment numbers the Ohio housing demand has continued to increase,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “With nearly 25 percent of the market accounting for first time and boomerang buyers taking advantage of low down payment loans through programs such as FHA, and nearly 25 percent of the opposite end of the buying pool accounting for all cash sales, this leaves a market in balance with nearly 50 percent of home purchases accounted for in conventional loans.”

Among major metro areas with a population of 1 million or more, 22 out of 51 markets (43 percent) were at eight-year highs for single family home and condo sales in the first four months of the 2015, including New York, Dallas, Houston, Seattle and Portland.

Report methodology
The RealtyTrac U.S. Home Sales Report provides percentages of distressed sales and all sales that are sold to investors, institutional investors and cash buyers, a state and metropolitan statistical area. Data is also available at the county and zip code level upon request. The data is derived from recorded sales deeds, foreclosure filings and loan data. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available for those previous months.

Definitions
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.

About RealtyTrac
RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary Homefacts.com, the company’s proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac’s data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.

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