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All-cash buyers and institutional investors were able to purchase residential homes at a larger discount rate from the average market value at the time of purchase than the average discount rate for all U.S. homebuyers in the third quarter, according to RealtyTrac's U.S. Institutional Investors & Cash Sales Report for Q3 2014. The average price paid for homes by institutional investors, which are defined as entities that purchase at least 10 properties in a year, was $159,000 in Q3 – a discount of 15 percent from the average market value at purchase, which was $188,000.
Cash buyers enjoyed nearly a 10 percent discount in Q3, with an average purchase price of $228,000 paid for a home. The average market value at the time of purchase for cash buyers was $253,000. Both discounts for institutional investors and all-cash buyers were well below the average discount rate for all buyers. In Q3, all buyers paid an average price of $278,000 for a home, a discount of only 4.3 percent from $291,000, which was the average market value at purchase.
As the share of first-time homebuyers hovers at its lowest level in nearly three decades, real estate professionals remain optimistic that homeownership is due for a comeback. In a panel at the 2014 Realtors Conference and Expo, one of the biggest topics of discussion was the state of millennial homeownership. While inventory shortages, tight credit access, and lower than average salaries have made for a bleak picture for young adults, the speakers largely agreed that these represent temporary setbacks as the economy makes its way to stable ground.
