Institutional Investors Take Larger Share

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IRVINE, CA-Institutional-investor purchases reached a new high in September, representing 14% of all US residential sales, according to locally based research firm RealtyTrac. In addition to being up from 9% in August and 9% in September 2012, this September had the highest percentage of institutional-investor purchases of any month since RealtyTrac began tracking in January 2011, the firm reports.

“The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash,” says Daren Blomquist, VP of RealtyTrac. “While the institutional investors are pulling back their purchases in many of the higher-priced markets—places like San Francisco; Washington, DC; New York; Seattle; and Sacramento—they are continuing to ramp up purchases in markets where median prices are still below $200,000—places like Jacksonville, Atlanta, Charlotte, St. Louis and Dallas.”

Blomquist adds that the availability of distressed inventory also makes a difference. “For example, institutional-investor purchases have rebounded in Las Vegas corresponding to a recent rebound in foreclosure activity there.”

According to Rich Cosner, president of Prudential California Realty, which covers the Southern California market, “Cash sales continue to account for a substantial number of home sales in Orange, San Bernardino and Riverside counties, but are decreasing by the month.” He adds that home sales in this market have been holding steady for the past three months in spite of slightly increased interest rates, and listing inventory has increased substantially, giving homebuyers far more choices.

As GlobeSt.com reported earlier this week, the average sale price of US residential properties rose 14% in September from a year earlier, a 2% increase over August's average, according to RealtyTrac. The firm also reports that the pace of home price gains is beginning to plateau in the nation's fastest-appreciating markets.

For RealtyTrac's complete report on the subject of institutional investors, click here.

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