The housing market over the past five years as been heavily influenced by cash sales, fueled by institutional and individual investors and the availability of REO (bank-owned) properties.
Cash sales made up 35.5 percent of total home sales in October 2014, down from 38.7 percent in October 2013, reports CoreLogic in its Insights Blog.
The year-over-year share has fallen each month since January 2013. That makes October 2014 the 22nd consecutive month of declines. Month over month, the cash sales share edged up by half of a percentage point, which s is typical for the fall and winter months.
The peak occurred in January 2011 when cash transactions made up a significant 46.4 percent of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent.
At the current rate of year-over-year decrease, the cash sales share should be back to pre-crisis levels in 2017, CoreLogic says.
Real estate owned (REO) sales had the largest cash sales share in October 2014 at 58.7 percent, followed by re-sales (35 percent), short sales (33 percent) and newly constructed homes (16.8 percent). However, REO transactions made up only 7.9 percent of total sales in October. That means REOS did not have a large influence on the overall cash sales market. In January 2011, this was not the case. At that time, when the cash sales share was at its peak, REO sales made up 23.9 percent of total sales.
CoreLogic says that Delaware had the largest share of cash sales of any state at 58.3 percent, followed by Alabama (51.3 percent), Florida (51.1 percent), New York (44.4 percent) and Michigan (43.1 percent).
Of the nation’s largest 100 “Core Based Statistical Areas” (CBSAs) measured by population, Miami-Miami Beach-Kendall, Fla. had the highest share of cash sales at 56.6 percent, followed closely by West Palm Beach-Boca Raton-Delray Beach, Fla. (56.1 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (55.6 percent), Detroit-Dearborn-Livonia, Mich. (55.5 percent) and Cape Coral-Fort Myers, Fla. (55.2 percent).
Washington-Arlington-Alexandria, D.C.-Va.-Md. had the lowest cash sales share at 16.0 percent.