What do you make of the fact that all-cash home sales are at a record high even as institutional investor interest is dropping to its lowest level in two years?
Are families, as one tweeter (see Tweet below) put it, “shrewdly avoiding taking on usurious 4.21% 30-year mortgages?” (The lowest rate in 2014, by the way.)
RealtyTrac reported Thursday that the percentage of all-cash buyers has soared in the past year, with 42.7% of all U.S. residential property sales in the first quarter all-cash purchases, up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013.
Notably, this is the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011. Meanwhile, institutional investors are walking away from housing.
According to RealtyTrac’s report, institutional investors — entities that have purchased at least 10 properties in a calendar year — accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013 to the lowest level since the first quarter of 2012.
So who are these cash buyers?
“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.”