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Investments

Institutional investor home buys hit 22-month low

Property investors still busy in select markets

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Institutional investor home sales continue to decline as a portion of all home sales, hitting a 22-month low.

That’s the latest news from RealtyTrac. The company’s January 2014 Residential & Foreclosure Sales Report shows that institutional investors accounted for 5.2% of all housing sales in January, down from 7.9% in December and down from 8.2% in January 2013.

Institutional investors are defined as entities purchasing more than 10 properties in a year.

All-cash sales accounted for 44.4% of all U.S. residential sales in January, the seventh consecutive month where all-cash sales have been above the 35% level. Cash sales are usually investor buyers, be they individuals, mom-and-pop investors, or institutional.

“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” said Daren Blomquist. “It’s unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago.”

Leading the decline were Cape Coral-Fort Myers Fla. (down 70%), Memphis, Tenn., (down 64%), Tucson, Ariz., (down 59%), Tampa, Fla., (down 48%), and Jacksonville, Fla., (down 21%).

About one in four metros saw increases in institutional investor activity, including Atlanta (up 9%), Austin, Texas, (up 162%), Cincinnati (up 83%), and Dallas (up 30%). (Check out HousingWire’s list of the 10 cities with the most investor activity.)

The report also shows that short sales and foreclosure-related sales — including both sales to third-party buyers at the public foreclosure auction and sales of bank-owned properties — accounted for a combined 17.5% of all U.S. residential sales in January 2014, up from 14.9% of all sales in December but down from 18.7% a year ago.

“The Denver metro area did not experience the typical winter slowdown that many markets across the country experienced and we continue to be very busy,” said Chad Ochsner, owner of RE/MAX Alliance covering the Denver, Colo., market.  “Our January year-over-year sales counts are up about 7%, which is really encouraging. I think it has a lot to do with improved consumer confidence and low interest rates.”

Short sales accounted for 5.9% of all U.S. residential sales in January, up from 5.4% in December but down from 7.4% a year ago.

Sales of bank-owned residential properties accounted for 10.2% of all U.S. residential sales in January, up from 8.5% in December but down from 10.4% a year ago.

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