RealtyTrac LogoAccording to today’s Q4 and Year-End 2014 U.S. Institutional Investor & Cash Sales Report from RealtyTrac, the share of home sales to institutional investors and all-cash buyers dropped to a four-year low in 2014. However, it rose in the fourth quarter both nationally and in Florida.

In many cases, institutional investors – buyers of at least 10 properties in a calendar year – pay with cash, though not all cash buyers are investors.

Year-to-year institutional investor comparisons

Over the past four years, Florida led the nation in institutional investor sales, with 78,155 Florida homes purchased. Behind Florida, these investors focused on California (52,802), Georgia (46,914), Arizona (35,979) and North Carolina (34,769).

Year-to-year, the percent of institutional investor sales in Florida declined from 7.9 percent (4Q 2013) to 5.1 percent last year (4Q 2014).

 

Nationwide, single-family homes sold to institutional investors made up 4.2 percent of all sales in 2014 – a drop of 31 percent compared to 2013 and a four-year low.

Fourth quarter institutional investors

In Florida, the percent of institutional investors increased in a quarter-to-quarter comparison, rising from 5.0 percent (3Q 2014) to 5.1 percent (4Q 2015).

Nationally, institutional investor purchases represented 3.7 percent of all single-family home sales in the fourth quarter, up from 3.5 percent of sales in the third quarter but below the 5.4 percent in the fourth quarter of 2013.

“While the overall percentage of purchases by institutional investors is nothing to write home about nationwide, the true impact of these investors can be seen more clearly at the hyper-local level,” says Daren Blomquist, vice president at RealtyTrac. “There were 35 zip codes nationwide where at least 50 single family homes were purchased by institutional investors in the fourth quarter.”

Florida cash sales

Last year, all-cash U.S. purchases fell below 1 million for first time in three years in 2014.

A total of 944,892 single-family homes and condos were sold to all-cash buyers in 2014, down 13 percent from the 1,083,169 all-cash sales in 2013. Overall sales of single-family homes and condos combined decreased only 2 percent in 2014.

In the past four years, Florida saw more than its fair share of cash sales, with one in four (22 percent) U.S. cash sales in the Sunshine State – 864,659 in Florida compared to 3,951,798 nationally. Florida is followed by California (453,175), Michigan (203,518), Georgia (176,408) and Arizona (170,320).

“With our limited land and growing population, the institutional investors believe our region will outperform the U.S. market,” says Mike Pappas, CEO and president of the Keyes Company.

Metro areas for cash buyers

Florida dominated the list of metro areas with strong sales to cash buyers. Among MSAs with a population of at least 500,000, Miami had the highest share of all-cash sales in the fourth quarter of 2014 – 58.1 percent – followed by Sarasota-Bradenton-Venice (54.3 percent), Cape Coral-Fort Myers (53.9 percent) Tampa (49.0 percent) and Memphis, Tennessee (48.1 percent).

“World money has been pouring into the Miami real estate market,” says Pappas. “The strong cash purchases are a validation of the Miami region as the undisputed capital of Central and South America. Many wealthy overseas individuals purchase properties as a safe haven. The strong dollar enhances their investment against declining valuation of their local currency.”