Home sales in March failed to deliver the same growth spurt that usually defines the onset of the spring-selling season, analytics firm Radar Logic
said Thursday when releasing its latest RPX Composite transaction data.
In March, the seasonal uptick in home sales was smaller than usual, with the RPX composite transaction count rising 11.5%, compared to the average 16.5% growth-spurt experienced in the month of March during the course of the past decade.
"On the whole, the 2011 home-buying season has gotten off to a slow start relative to past years," Radar Logic
said in its report. "But sales of foreclosed homes have scarcely missed a beat, thanks to investors bearing cash."
Even though spring sales are not living up to their usual promise, Radar Logic says investors are "still very active" and are outpacing ordinary buyers who are waiting it out on the sidelines. Radar Logic said investors are going after foreclosed homes, benefiting from prices that are on average 39% lower than regular properties.
At the same time, Radar Logic says investors largely ignored the rest of the market as ordinary sellers have not yet lowered their prices to levels at which investors feel confident they can make an adequate return on their investment.
As for why ordinary buyers are not jumping in to take advantage of low prices, Radar Logic blames widespread negative equity, which is causing current homeowners to stay in place rather than losing money on their current homes.
Radar Logic also noted that aside from FHA loans, lenders are now asking buyers to put extensive down payments down on homes, which is chasing off buyers who are afraid of investing capital in a market where prices are volatile and subject to declines.
The RPX composite price grew a slight 0.5% in March, hitting $179.78 per square foot. That is significantly lower than the average 1.5% increase experienced in the month of March during the past decade, excluding the years 2008 and 2009.
Home prices nationwide reached a seasonal trough in February, after falling to
the lowest level since March 2003.
A decline in home prices is attributed to an influx of foreclosure sales, which are dampening market prices.
Write to Kerri Panchuk