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Investor Activity Increases Property Sales

According to RealtyTrac, a leading provider in the real estate information industry, investor acquisitions in the housing sector increased both transaction volume and property sales in September. This is particularly encouraging, as fears of higher interest rates facilitated uncertainty on a national level. Analysts projected the end of 2013 to witness a lull in activity. However, the recent RealtyTrac report acknowledged that investor involvement increased activity over this time last year. Residential properties sold at an estimated annualized pace of 5.6 million in September, up 2% from August.

At the same time, larger investment firms accounted for 14% of all sales in September, up from 9% in August and also 9% growth from September 2012. Once again, significant investor activity is particularly encouraging. The September report was the beneficiary of the highest percentage of institutional investor purchases of any month since January 2011.

“The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash,” said Daren Blomquist, vice president at RealtyTrac.

Of particular interest, however, is a subsequent increase in the median sales price on a national level. The average sales price of a residential property was up 1% in September, peaking at $174,000. For comparison, the September price exhibited a 6% increase from the same time last year. These figures reflect both distressed and non-distressed properties.

Distressed residential properties, by themselves, were approximately 41% below the median price range of non-distressed houses. Distressed sales accounted for 25% of all September sales, rising 18% from all sales a year ago.

“Distressed sales remain persistently high, particularly short sales,” Blomquist said. “Markets with the biggest increases in short sales tend to be those where either foreclosure starts or scheduled foreclosure auctions have rebounded in the last 18 months — translating into more motivated short sellers — or those with a still-high percentage of underwater homeowners with negative equity.”

Certain regions contributed to more investor activity than others. Atlanta, Las Vegas, St. Louis, Jacksonville, Fla. and Charlotte, N.C. demonstrated an increased propensity for investor activity. In fact, they were the cities with the largest percentage of institutional investor purchases.

“While the institutional investors are pulling back their purchases in many of the higher-priced markets — places like San Francisco, Washington, D.C., New York, Seattle and Sacramento — they are continuing to ramp up purchases in markets where median prices are still below $200,000 — places like Jacksonville, Atlanta, Charlotte, St. Louis and Dallas,” Blomquist added.

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