Charlotte Most Active Market for Institutional Investors

Homes bought by institutional investors in April in the Charlotte area reached a record high of 737, according to RealtyTrac, whose records begin in January 2011. The percentage of homes purchased in the region by institutional investors in April was higher than in any other metro area in the U.S., according to RealtyTrac, a California-based real estate information and analytics provider.

Institutional investors were responsible for 27.2 percent of all Charlotte-area home sales in April, which was significantly higher than the 13.4 percent of homes institutional investors purchased in April last year. The rate of institutional investor purchases in March was 10.8 percent.

Institutional investors are defined as entities that purchase 10 or more homes in a calendar year.

Nancy Braun, owner of Charlotte-based Showcase Realty, said institutional investors are taking advantage of the area’s high demand for rental housing. “You definitely have some institutional investors that are feeling very strong and positive about our economy and the rental opportunities that are still out there,” she said.

Daren Blomquist, vice president at RealtyTrac, said during an interview that 390 of the 737 homes purchased by institutional investors were bought by one company, an indirect subsidiary of Silver Bay Realty Trust Corp. He also said an increasing number of bank repossessions the last couple of months could have contributed to the high number of homes purchased by institutional investors in April.

In April 2014, institutional investors purchased 279 homes.

Behind Charlotte was Atlanta, where 17.5 percent of all homes were purchased by institutional investors in April. Memphis, Tennessee, had the third-highest rate of institutional investor purchases at 11.8 percent.

The percentage of homes purchased with cash in Charlotte also jumped up in April to 42.7 percent, compared with 35.4 percent a year ago.

Ten metro areas in the U.S. had higher cash sales rates than Charlotte in April, including the Sarasota-Bradenton-Venice area in Florida, which had the highest rate of cash sales at 59.4 percent.

Nationally, 28.7 percent of all homes were purchased with cash in April, down from 29.9 percent in March and 32.8 percent a year ago.

RealtyTrac also reported that the median sales price of homes, including distressed properties, in the Charlotte area fell 3 percent to $145,000 in April compared with $150,000 a year ago. Compared with March, the median sales price in April dropped 2 percent. The median sales price of distressed homes, on the other hand, rose 16 percent to $102,000 in April from $88,000 a year ago, but fell slightly from $102,368 in March.

Among U.S. counties with a population of more than 100,000 and at least 100 home sales, Mecklenburg County was one of 85 in which homes sold on average at least 101 percent of their estimated market value. In both Alameda and San Francisco counties in California, homes sold on average for 108 percent of their market value, the highest in the country.

Nationally, the median home sales price in April was $171,700, up 2 percent from a year ago and down 1 percent compared with March. The median home price in April appreciated year-over-year at its lowest rate since April 2012. The San Jose-Sunnyvale-Santa Clara area in California had the highest median sales price in the country in April at $750,000.

 

Written by Eric Dinkins of Mecklenburg Times. eric.dinkins@mecktimes.com

All-Cash Home Buyers and Institutional Investors Enjoy Huge Discount Rates For Q3

According to the U.S. Institutional Investors & Cash Sales Report for Q3 2014 released recently by RealtyTrac, all cash buyers and institutional investors enjoyed huge discount rates when they bought residential homes from the average market value at the time of purchase compared to the average rate for all U.S. homebuyers in the third quarter.

RealtyTrac’s report show that institutional investors, which are described as entities that bought at least 10 properties within 12 months, paid an average price of $159,389 in third quarter, which is a 15 percent discount from the average market value at purchase of $187,637. As for cash buyers, they got about 10 percent discount in the same quarter with an average purchase price of $227,905 compared to the average market value at $252,640.

The discounts enjoyed by both parties were certainly below the average rate for all homebuyers, according to RealtyTrac. All homebuyers who bought a home in the third quarter paid an average price of $278,040, a 4.3 discount from the the average market value at purchase price of $290,531.

Furthermore, these all-cash home sales represent a huge share of distressed sales (54.6 percent), which involves homes currently bank-owned or those within the foreclosure process.

All-cash sales represent 33.9 percent of single-family and condo sales in the third quarter, which is a slight drop from 36.9 percent in the second quarter and unchanged from the same period in 2013. In addition to that, RealtyTrac’s report showed that the cash sales were greatest at the highest and lowest extremes of the housing market with 64 percent of home sales done under $100,000 and 41 percent above $2 million.

As for the share of single-family and condo homes bought by institutional investors, it dropped from 5.3 percent in Q3 2013, 5.0 percent in Q2 of this year to a four-year low of 4.3 percent in Q3.