Investors, Cash Buyers Continue to Drive Housing Recovery
We are ending the year with some excellent news for the housing market. Home sales were up in November, and so were home prices.
According to housing data firm RealtyTrac, U.S. residential properties, which includes condominiums, townhomes and single-family homes, sold at an annual pace of 5,146,565 in November.
Home sale volume jumped 10 percent in November, compared to a year ago period, but increased less than 1 percent compared to October’s revised pace of 5,128,034.
Home prices are also up, albeit slightly. The median sales price for all residential properties in November was $169,000. That’s up 1 percent compared to the prior month and up 7 percent compared to the year ago period. November was also the 19th consecutive month that median prices have gone up on an annualized basis.
Rising home prices may have kept individual buyers at bay, but they continue to attract real estate investors.
“The housing market recovery continued to be driven by investors and other cash purchasers in November,” said Daren Blomquist, vice president at RealtyTrac. “Lenders are taking advantage of this environment to unload more of their bank-owned inventory and in-foreclosure inventory at the foreclosure auction.”
Annualized home sale volume declined in 18 states when compared to October, but slipped only in four states when compared to a year ago period. California experienced a double-digit dip with an annual sale volume decrease of 14 percent, followed by a 12 percent drop in Arizona.
“As the backlog of distressed inventory available dries up in many of the markets with the most efficient foreclosure processes, namely California, Arizona and Nevada, with Georgia not far behind, overall sales volume is declining and will continue to do so until more non-distressed sellers enter the market,” Blomquist said.
Home Sales to Continue Growing in 2014
Despite signs of slowdown in the recovery process, things look upbeat for the housing market in 2014.
Granted, the housing market still has many dampers impeding its recovery. Home prices are still skyrocketing in some markets and mortgage rates are continuing to climb up, creating barriers for first-time buyers with less financial resources. The hanging threat of new mortgage rules and housing finance reforms could also negatively impact home sale volume.
But, despite these challenges, The Wall Street Journal reports that economists predict home sales will increase next year. Hiring numbers will be strong enough to continue the recovery process. There are also signs that prospective buyers are getting used to higher home prices; the sale volume of single-family homes is close to its fastest pace since 2008.
“It’s almost going to be like a tug of war next year. You have what appears to be a recovering economy, but at the same time you have the prospect of higher interest rates,” said Nicolas Retsinas, senior lecturer in real estate at Harvard Business School. “Generally, when there is a tug of war between jobs and interest rates, jobs win.”
According to the National Association of Home Builders, new single-family home sales are expected to hit 607,000 in 2014, compared to an annualized rate of 464,000 in November.
Read More: Realestate.com