Institutional Investor Sales Decline

RealtyTrac released its January 2014 Residential & Foreclosure Sales Report on Thursday, revealing institutional investors made up 5.2 percent of all U.S. residential property sales in January. Institutional investor sales are down from 7.9 percent in December, and down 8.2 percent from January, 2013.

The report clarifies that institutional investors are “defined as entities purchasing at least 10 properties in a calendar year.”

The January share of institutional investors was the lowest monthly level since March, 2012—a 22 month low.

Short-sales and foreclosure-related sales, “including both sales to third party buyers at the public foreclosure auction and sales of bank-owned properties,” combined for 17.5 percent of all U.S. residential shares in January, 2014, according to the company’s report.

All-cash sales increased to 44.4 percent, the seventh month above 35 percent.

“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” said RealtyTrac VP, Daren Blomquist.

Metro areas with big drops in institutional investor share from a year ago included Cape Coral-Fort Myers, Florida (down 70 percent); Memphis, Tennessee (down 64 percent); Tucson, Arizona (down 59 percent); Tampa, Florida (down 48 percent); and Jacksonville, Florida (down 21 percent).

Counter to the national trend, 23 of the 101 metros analyzed in the report posted year-over-year gains in institutional investor share: Atlanta, Georgia (up 9 percent); Austin, Texas (up 162 percent); Denver, Colorado (up 21 percent); Cincinnati, Ohio (up 83 percent); Dallas, Texas (up 30 percent); and Raleigh, North Carolina (up 15 percent).

Blomquist continued, “It’s unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago.”