RealtyTrac: "Institutional Investor Housing Purchases Plummet Nationwide"

Tyler Durden's picture

Concluding the trifecta of today's housing data, we present perhaps the most authoritative report on what is actually going on in the market, that by RealtyTrac. What RealtyTrac has to say is in direct contradiction with both the Permits and Case-Shiller data, both of which are now openly reliant on yield-starved institutional investors dumping cash into current or future rental properties. In fact it's worse, because if RealtyTrac is accurate, the great institutional scramble for any housing is now over - to wit: "Cash Sales Pull Back From Previous Month, Still Represent 44 Percent of Total Sales Institutional Investor Purchases Plummet Nationwide...  Institutional investor purchases represented 6.8 percent of all sales in October, a sharp drop from a revised 12.1 percent in September and down from 9.7 percent a year ago. Markets with the highest percentage of institutional investor purchases included Memphis (25.4 percent), Atlanta (23.0 percent), Jacksonville, Fla., (22.2 percent), Charlotte (14.5 percent), and Milwaukee (12.0 percent)." And plunging.

Some other observations from RT's October 2013 Residential & Foreclosure Sales Report, which makes one thing clear - while prices may still be going up, transaction volumes have cratered:

Despite the nationwide increase, home sales continued to decrease on an annual basis for the third consecutive month in three bellwether western states: California (down 15 from a year ago), Arizona (down 13 percent), and Nevada (down 5 percent).

 

The national median sales price of all residential properties — including both distressed and non-distressed sales — was $170,000, unchanged from September but up 6 percent from October 2012, the 18th consecutive month median home prices have increased on an annualized basis.

 

The median price of a distressed residential property — in foreclosure or bank owned — was $110,000 in October, 41 percent below the median price of $185,000 for a non-distressed property.

 

“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” said Daren Blomquist,vice president at RealtyTrac. “The combination of rapidly rising home prices — along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home — means short sales are becoming less favorable for lenders.”

 

More in the full report

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I am Jobe's picture

Sheeples still trying to full fill their dreams. Slave on bitchezz

XAU XAG's picture

Is this the quickest bubble in history?

 

Boy............the FED are good

Keyser's picture

I wouldn't want these invester's book for any amount of money. 

Vampyroteuthis infernalis's picture

Is this the quickest bubble in history?

 

This is an echo bubble. The sheeple were hosed long ago with the runup!

Newtons Lawyer's picture

May be an echo bubble but clearly orchestrated by the Fed, as stated by the Bernank and Ms. Yellen in her congressional testimony.  They both seem so pleased that they have increased housing values back to unsustainable levels.  Just the new normal I guess, until it's not.

Jadr's picture

I disagree with the unsustainable levels comment.  Maybe in a few markets you perceive it to be that way.  In Vegas, even after the huge increase in prices over the past two years you are still looking at prices that are 60% of the peak bubble prices and in terms of median income to median home price and in terms of the cost of ownership vs the cost of renting, buying homes in Vegas is still extremely affordable and cheaper than renting.

midtowng's picture

The problem is that bubbles usually end with the sheeple buying in at the top.

This time Wall Street priced the sheeple out very early in the bubble. There will be no dumb money coming to bail out the smart money, unless it comes from someone else on Wall Street.

Sudden Debt's picture

yeah...

this time looked different...

smelled different...

could have been different...

but wasn't...

ElvisDog's picture

I don't think it's the sheeple. I think it's the institutional investors who are kidding themselves that they will be able to steadily increase rents on people making $25K a year. I mean, with free money from the Fed there's not that much downside but the idea that they can increase their rental income 8-10% a year ain't gonna happen.

Jadr's picture

No one is modeling for increases of 8% to 10% per year.  It's more like 3%.

LauraB's picture
Robert Shiller on Housing: Don't Trust Momentum: http://www.cnbc.com/id/101228953

Fed's Housing Preoccupation Dangerous: Ex-Fed Gov (Kevin Warsh): http://www.cnbc.com/id/101228849

forrestdweller's picture

make sure people who lose their jobs, only find low wage jobs.

make sure that they are indebted. they sell or leave their homes.

pay them real low salaries. then they will rent.

put them in cheap, badly built barracks.

control the government, control the money and the law.

make money.

it's all about greed.

 

LawsofPhysics's picture

Correct, right up until the supply lines break and essential commodities cannot be delivered, then world war.

Same as it ever was.

Headbanger's picture

I see what you mean more and more now.  As i posted here the other day, all it would take now are some labor strikes in essential services such as police, transportation/shipping, etc to trigger riots in major cities as in LA back in '92.  It could then escalate to millions fleeing the afflicted cities only to find neighboring states closed their borders to prevent the spread of the violence.  Vital infrastructure could be seriously damaged thus cutting fuel and electricity supplies...  And so on.

Money would become meaningless.

LawsofPhysics's picture

When "money" goes from being a mechanism for us to exchange real goods and services to primarily a means to maintain power and control, world war is never far behind.  Save your wealth in real assets that you and your tribe can defend. 

Same as it ever was, as apparently humanity never really learns anything after all.  When you kill all means of price discovery, prices become irrelevant pretty damn quick.

Headbanger's picture

What's scary now is the 'Black Swan" may be a seemingly unimportant labor strike in essential services or another Rodney King episode.

The sheeple are getting stressed out and now and can quickly turn into wolves!

This is why many local police forces are buying the used military armored vehicles returning from Iraq and Afghanistan.

And then there's Homeland Security Dept buying billions of rounds of ammo.

I'm not so sure about the result being a world war.  However I believe a civil war could be the result.

kaiserhoff's picture

Well said.

The people running this circus have never done an honest day's work.

Real value is invisible to them.

homiegot's picture

That's why it's prudent to invest in firearms and ammo. I guess if they can't eat food they can eat lead.

kaiserhoff's picture

Things I tried not to know:

  Certain elements in our society have always referred to a pistol as a poor man's ATM.

  Coming soon to a city near all of us.

john39's picture

think about it. they can print money from thin air... its not about greed. its about power, and control. the few want to rule the many. printing money is just a tool to help get the job done.

LawsofPhysics's picture

define "money"....

I have been using several forms myself over the last 5 years.

You decide who has the power john..

john39's picture

99.99% of Americans use the FRN.  They use the FRN to buy the media, buy all cultural institutions, buy most politicians (kill or blackmail those who don't play ball).   the fact that a tiny percentage of americans attemt to escape the FRN has not thwarted their plans one iota.   not to imply that i think they will succeed.  just goes back to my original point.   its not really greed at play, but lust for power.  a different flaw.

LawsofPhysics's picture

Someone knows something...

Those in the club, know who they are.

same as it ever was.

Trimmed Hedge's picture

I'm just a lowly renter..

At my age, having never owned a home, that is just pathetic

I'm a failure in life..

Just going to kill myself & fuck the body... :(

Charles Nelson Reilly's picture

you may want to consider a 5/1 ARM before you off yourself

LawsofPhysics's picture

Yes, the bank will lever that body at 10,000x it's real value and no-one will question that valuation on their book.

Keyser's picture

Can you use body parts as collateral on a 30-year fixed? 

RSDallas's picture

Sounds like good news to me.  

RobD's picture

The Mortgage Dept Relief Act expires Jan 1, 2014 and there is no movement I can find on extending it so short sales will dry up even more next year.

TheFreeLance's picture

Next up, bulldoze those single fams on quarter-acre lots, throw up subsidized tenements (banksters earn low-income housing tax credits that way), run mass transit built and operated by union workers to the proles so they can get to and from their part-time jobs somewhat on time. Ta-da.

AngelEyes00's picture

Let's build a nation of minimum wage part-time workers with no healthcare or other benefits, living in squalor at the edge of towns owned by institutional investors (billionaires), that will cower and jump everytime their employer says work Saturday, Sunday and don't you dare complain or we'll fire you and hire one of six million others waiting for this lowly job.  Let's not give them enough to be able to go anywhere except stay home on their time off.  This way the billionaires will want to provide campaign financing funds for those politicians that support such policies.  When the consumer doesn't have enough money to generate GDP growth, let's give the billionaires money (QE) to invest.  Sure, that will work.  We'll be the strongest country in the world.

Shizzmoney's picture

I think this is another underreported hidden consequence of extended artifically low interest rates from the Fed.

Say you have 300k in a portion of your retirement portfolio. Even if you can get as much as 2% (which is a difficult number to hit these days) in a low risk investment, that is only $500 a month in income.

If you buy a 300k property, the rent probably quadruples that number to about $2000, and then it is probably worth the hassle & added risk of being a landlord. However, that rent will only increase with property taxes and vacancy rates in the teens and even lower (like in Boston and SF).  This creates a sticky gentification situation.

The boomers are the generation that has the cash on hand, as do foreign investors to a certain extent. As much as this is often portrayed as a rich versus middle class thing in the media, it seems like it is more of a generational thing to me. "Old money".

These homes are being bought with mostly cash either to out-bid or bid up, especially in high end markets like MA, NY, CA. 

And who has that cash? international investors and hedge funds. 

This will not end well.