Monday, December 17, 2012

Lawler: Foreclosure Share Way Down, But Not All-Cash Share; Suggests Investor Purchases of Non-REO Properties Up Sharply

by Bill McBride on 12/17/2012 04:26:00 PM

From economist Tom Lawler:

While most areas have experienced a significant decline in the foreclosure share (as well as the overall “distressed-sales” share of home sales this year, it’s sorta interesting to note that the all-cash share of homes purchases has not fallen, at least in areas where data on financing are available. E.g., here is a table showing the “all-cash” share of home purchases this November compared to last November in selected markets. All data are based on realtor association/MLS reports, save for the Southern California, which are Dataquick’s tabulations based on property/mortgage records. Also shown are the foreclosure and short-sales shares of home sales. Note that for Sothern California the foreclosure and short-sales shares are share of resales, while the all-cash share is the share of total sales. Note also that I don’t have the foreclosure and short sales shares for the Baltimore and DC metro areas, but only for the whole area covered by MRIS. However, the Baltimore and DC metro areas account for about 77% of total home sales through MRIS, so ...

While in most of these areas the foreclosure sales share of resales in November was down considerably from last November, as was the overall “distressed” sales shares, the all-cash-financed share of home sales was actually higher this November than last November in many areas, and in other areas it was little changed from a year ago. Most analysts (and realtors) believe that investors make up a substantial share of all-cash purchases. Given that the all-cash share of purchases is flat to higher while the foreclosure share of purchases is down considerably, it appears as if investors have considerably increased their purchases of non-foreclosure properties over the last year.

All Cash ShareForeclosure ShareShort-Sales Share
Las Vegas52.7%48.2%10.7%46.0%41.2%26.8%
Baltimore Metro23.8%23.8%    
DC Metro18.8%20.4%    
MRIS (Mid Atl)  8.7%14.2%11.9%13.7%
Southern CA33.0%29.5%15.3%31.6%26.3%24.9%