Cash Sales Continue Year-over-Year Retreat

by devteam August 18th, 2015 | Share

The level of cash sales remains high inrnseveral states, mostly those also still experiencing a high level ofrnforeclosures.  CoreLogic said on Tuesday howeverrnthat on a national basis the level of those sales has now fallen to the lowestrnpercentage since July 2008. </p

Cash sales made up 31.9 percent ofrntotal home sales in May 2015, down from 35.1 percent in May 2014 and continuingrna 29 month streak of year-over-year decreases dating back to January 2013.   Monthrnover month, the cash sales share fell by 1.7 percentage points.  According to CoreLogic seasonality in thernhousing market means that comparisons should be made on a year-over-year basis.rn</p

The national share of cash sales isrnhighest for sales of lender-owned real estate (REO), accounting for 56.1rnpercent of those sales and reflecting the high level of investor involvement inrnthat sector.  REO represents a shrinkingrnportion of the overall home market, only 6.4 percent in May, and thus has arnlessening impact on the total cash percentage. rnWhen cash transactions peaked at 46.5 percent of sales in January 2011rnREO sales made up 23.8 percent of the market.</p

Resales had the second highest share ofrncash sales at 14.7 percent.  Resalesrntypically make up the majority of home sales (about 82 percent in May 2015),rnand therefore have the biggest impact on the total cash sales share.  About 30.1 percent of short sales, which haverna very small market presence were all cash as were just under 15 percent of newrnhome purchases.</p


CoreLogic said if the cash transactionrnshare continues to drop at the same rate it did in May it should return to itsrnpre-housing crisis level by mid-2017. rnPrior to the crisis cash sales typically had about a 25 percent share.  </p

The largest cash sale share was inrnFlorida at 47.8 percent.  The staternremains at or near the top in the number of properties in foreclosure.  It was followed by New York with a cash sharernof 45.8 percent and New Jersey at 45.8 percent. rnBoth states are also ranked in the top five for distressed properties asrnis Michigan.  It was fifth in cash salesrnat 38.4 percent.  Alabama was number fourrnat 44.2 percent.  </p

Among the nation’s largest 100 CorernBased Statistical Areas (CBSAs) the four of the top five for cash sales in Mayrnwere in Florida; West Palm Beach-Boca Raton-Delray Beach at 58.1 percent, Sarasota-Bradenton,rn(55.9 percent), and Cape Coral-Fort Myers (55 percent) and Detroit and Miami bothrnwith 54.6 percent shares.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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