Housing Prices Rise as Distressed, Cash Sales Decline

Contributing Writer, B2R Finance | Real Estate Investment

Investors in single-family rental properties saw the value of their portfolios rise last year, as 91 percent of major metros experienced year-over-year median price increases, according to RealtyTrac’s Year-End 2015 U.S. Home Sales Report.

This is a good news, bad news story for property investors.

A rise in value for existing portfolios can be viewed as good news if an investor decides to sell part or all of his or her holdings. However, it’s also challenging for investors seeking to acquire new properties in a housing market experiencing rapid price increases.

A closer look at price gains

Single-family property sellers in the United States last year realized an average price gain since purchase of 11 percent, according to RealtyTrac, which said that’s the biggest average price gain for U.S. home sellers since 2007 — an eight-year high.

“This return to consistent home price gains for sellers should reinforce confidence in real estate in 2016 and produce another year of solid sales volume as homeowners cash out their equity gains,” said Daren Blomquist, vice president at RealtyTrac.

The country recorded a median home price of $206,500 in 2015, up 10 percent from a year ago. December marked the 46th consecutive month of year-over-year median home price increases.

Among the 87 metro areas analyzed by RealtyTrac, 33 (or 38 percent) posted new all-time highs for median home prices in 2015.

Among the nation’s 46 markets with a population of at least 1 million, those with the biggest year-over-year increase in home prices were St. Louis (19 percent increase), Raleigh, North Carolina (17 percent), Detroit (17 percent) and Tampa (15 percent), with Denver, Seattle, San Jose and Providence, Rhode Island, all posting increases of 13 percent.

Homes in the hole

Eight markets among the 87 analyzed for the report posted a year-over-year decrease in median home sales price at the end of 2015, and Houston was the only market with a population of greater than 1 million to post a decrease (down 2 percent in December from a year ago).

The other seven markets posting a year-over-year decrease in median home price were Bridgeport, Connecticut (down 8 percent), Winston-Salem, North Carolina (6 percent), Dayton, Ohio (5 percent), Augusta, Georgia (4 percent), Little Rock, Arkansas (1 percent), Harrisburg, Pennsylvania (1 percent), and York, Pennsylvania (1 percent).

Home sales volume reaches nine-year high

A total of 3.1 million U.S. existing single family homes and condos sold in 2015, up 7.5 percent from 2014 to the highest level since 2006, when there were 3.4 million single family and condo sales (nine-year high), according to the public record real estate deed data collected by RealtyTrac in nearly 1,000 counties nationwide.

Decline in distressed sales and short sales

Distressed sales (in-foreclosure and bank owned) and short sales combined accounted for 17.3 percent of all sales in 2015, an eight-year low.

Among metropolitan statistical areas with a population of at least 200,000 those with the highest share of distressed and short sales combined were Atlantic City, New Jersey (34.2 percent), Orlando (31.1 percent), Tallahassee, Florida (31.1 percent), Rockford, Illinois (31.1 percent), and Gainesville, Florida (30.8 percent).

Decline in cash buyers

All-cash buyers accounted for 30.1 percent of all U.S. single family home and condo sales in 2015, down from 31.6 percent in 2014 and down from 35.6 percent in 2013 to the lowest level since 2008. The peak in share of cash sales was in 2012 at 36.3 percent.

The good news in a rising housing market is that investors have had more options for financing investment properties in recent years. During that time, lenders reached out to real estate investors with new products and financing options, including the asset-based lending products offered by B2R Finance. As the market continues to make strides, even more products will be offered, giving investors the tools to aggressively grow their portfolios.

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B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit http://www.b2rfinance.com/apply-now and follow us on Twitter @B2RFinance.

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