investment sales

Sales for Investment Purpose: 13 Percent of Residential Sales in October 2016

In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members the characteristics of the most recent sale that closed in the reference month, including “Did the buyer purchase the property as an investment property?”

Investment sales made up 13 percent of sales in October 2016 (14 percent in September 2016; 13 percent in October 2015). At their peak in 2009, investment sales were 25 percent of sales. Purchases for investment purposes have generally been on the decline, with fewer distressed sales on the market and with home prices rising to levels that make the purchase less attractive as an investment. Also, low mortgage rates are less of a benefit to investors since many of them use cash to purchase a home.

investment sales

Distressed sales accounted for five percent of sales in October 2016 (four percent in September 2016; six percent in October 2015). Foreclosed properties were four percent of residential sales, while short sales were only one percent of residential sales.[1] With rising home values, improved economic conditions, and fewer foreclosures, the share of sales of distressed properties has generally continued to decline. Distressed sales accounted for about a third to half of sales until 2012 when they began to fall below this level.

distressed

As the shares of investment and distressed sales to total sales have declined, so has the share of cash sales. Purchases that were financed with cash were 22 percent of sales in October 2016 (21 percent in September 2016; 24 percent in October 2015. Buyers of homes for investment purposes, distressed sales, second homes, and foreign clients are more likely to pay cash than first-time home buyers.

 

cash salespercent of cash sales


[1] The survey asks respondents who had a sale in the month to report on the characteristics of the most recent sale closed.