Institutional Investor Sale Share Sinks to Four-Year Low in Q3

Institutional investor sales comprised 4.3 percent of all single-family residential home and condo sales in the third quarter of 2014, down from 5 percent in the second quarter and from 5.3 percent in Q3 2013, according to RealtyTrac's Q3 2014 Institutional Investor and Cash Sales Report released on Thursday.

The share of sales to institutional investors, which are defined as entities that purchase at least 10 properties in a calendar year, fell to its lowest level since the fourth quarter of 2010, according to RealtyTrac.

"Institutional investors are still actively purchasing single family rentals, but continue to gravitate toward markets where lower-end inventory is still available," RealtyTrac VP Daren Blomquist said. "Meanwhile, there has been a recent surge in cash buyers in some markets, often coinciding with either a rebound in distressed sales attracting bargain-hunting cash buyers or a booming job market engendering a competitive bidding environment where cash is king."

Despite the overall decline, eight states saw a year-over-year increase in share of institutional investor purchases in Q3, led by Iowa, where the share jumped from 3.6 percent to 8.4 percent; Ohio, where the share increased to 5.9 percent in Q3 from 4.1 percent in the same quarter last year; Maryland (4.4 percent in Q3 2014 compared to Q3 2013), and Florida (7.2 percent in Q3 2014 compared to 6.4 percent in Q3 2013), RealtyTrac reported.

The metropolitan statistical areas (MSA) out of those with a population greater than 500,000 with the highest share of institutional investor purchases in Q3 were Memphis, Tennessee (16.4 percent), Charlotte-Gastonia-Concord, North Carolina (14.2 percent), Columbus, Ohio (12.6 percent), Atlanta-Sandy Springs-Marietta, Georgia (12.5 percent), and Orlando, Florida (11.0 percent), according to RealtyTrac.

Although Memphis had the highest share of institutional investor sales in Q3 overall, the Memphis MSA was not among those areas with the largest year-over-year increase. In fact, the Memphis MSA's declined year-over-year from 20.3 percent in Q3 2013 down to 16.4 percent in Q3 2014. The MSA that saw the largest year-over-year increase in share of institutional investor home purchases was Columbus, Ohio, where the share shot up from 4.5 percent in Q3 2013 to 12.6 percent in Q3 2014.