For many homebuyers, mortgage financing is hard to come by these days. Lenders have tightened up credit requirements in an about-face from the lax lending of pre-crisis days that put people into mortgages they couldn't afford and fueled record-high delinquencies.[IMAGE]
Evidence of constricted mortgage credit was highlighted in the latest ""HousingPulse"":http://campbellsurveys.com/housingreport/housing1.htm report from Campbell Surveys and _Inside Mortgage Finance_ as cash transactions set a new record, accounting for 33.7 percent of home purchases in February.
A ""separate study conducted"":http://www.dsnews.com/articles/sales-of-previously-owned-homes-slump-96-2011-03-21 by the National Association of Realtors (NAR) shows the same trend. NAR also found that all-cash sales were a record 33 percent in February. By comparison, they were 27 percent in February 2010, according to NAR's historical data.
The HousingPulse report notes that the increase in cash purchases last month paralleled a rise in activity among investors, who for the most part have their sights set on distressed properties that can be scooped up at a discount.
Investors bought 23.5 percent of the homes sold in February, up from 19.9 percent just two months earlier, according to the industry survey. Real estate agents participating in the HousingPulse survey of February transactions confirmed the surge in investors.
""We are seeing investors come back into the market. One investor told me that one house he wanted came on Wednesday p.m and had nine offers by Thursday a.m.,"" stated an agent in New Jersey.[COLUMN_BREAK]
""There are a number of investors and businesses buying up the short sale and REO properties and renovating them and then selling them as traditional sales,"" reported an agent from Arizona.
NAR's February report on existing-home sales noted that the median sales price on previously owned homes dropped 5.2 percent in February compared to the price points of a year earlier to hit a nine-year low.
The trade group attributed the decline to a larger number of distressed properties in the sales pool Ã¢â‚¬" 39 percent in February Ã¢â‚¬" thanks to investors with cash in their hands snapping up homes at bargain prices.
There are conflicting views within the industry as to the effect increased investor activity in the distressed property marketplace has on communities struggling to recover from the housing crisis. A separate ""article here on DSNews.com"":http://www.dsnews.com/articles/are-property-investors-helping-or-hurting-struggling-neighborhoods-two-reports-disagree-2011-03-18 examines both sides of the debate over whether property investors are solving or contributing to neighborhood blight.
While investor appetite is strong for REOs and short sales that carry a discount price tag, the selection of properties that fall into this class has contracted somewhat.
The HousingPulse Distressed Property Index (DPI) registered a slightly lower reading in February than in January, marking its first decline since last fall.
The report notes that the drop was not likely the result of a healing housing market, rather is appears to be linked to delays in the listing and sale of distressed properties as mortgage servicers continued to deal with legal and regulatory fallout surrounding title and paperwork issues following the robo-signing mess.
The HousingPulse survey polls over 3,000 real estate agents from across the country each month to provide insight into home sales and mortgage usage patterns.
The survey also found that average transactions per real estate agent fell from 2.1 in January to 1.7 in February Ã¢â‚¬" a sign the home sales are slipping at a time of the year when they typically begin to increase. The report notes this may be an indicator that the spring buying season will start with a deficit.