Twin Cities Bidding Wars Subside: Fewer Cash Homebuyers

Home Destination keeps Twin Cities home buyers current on the pace of Twin Cities home sales and all-cash buyers.

Competition with all-cash home buyers in the Twin Cities housing market is easing, according to CoreLogic's Market Pulse and a report from RealtyTrac. Twin Cities Bidding Wars Subside: Fewer Cash Homebuyers

August 19, 2014

Having fewer cash home buyers gives first-time homebuyers a better chance as the number of Twin Cities multiple bid offers and bidding wars subside.

Home Destination, a Twin Cities residential real estate agent with RE/MAX Results comments on what is happening with metro cash home buyers in comparison to the national report according to CoreLogic's MarketPulse.

Competition with All-Cash Home Buyers in the Twin Cities Housing Market

Home buyers placing purchase offers on a home are still competing with all-cash home buyers. The number has improved though, for buyers who are looking for a ease in competition. All-cash home transactions comprised 38% of all sold homes nationally in Quarter 2 of 2014, according to RealtyTrac, a drop to 42% from Quarter 1.

Part of the decline can be attributed to few institutional investors. Large residential real estate investor / buyers, who snap up 10 or more homes per year, face thin levels of fixer-upper bargain real estate listings. This has slowed their pace of purchasing. Their portion of 4.7% of all home sales has lowered from a peak of 6% in 2013. This may be helpful to first-time home buyers in the Minneapolis metro; read our tips on how to compete with all-cash home buyers.

Competition with All-Cash Home Buyers in the Twin Cities Housing Market

Nationally, cash property sales comprised 34.4 percent of all home sales. When comparing the month of May 2014 to previous years, currently cash buyers make up the lowest share since May 2010. It is also a decrease from 37.4 percent the same month a year ago, according to CoreLogic’s newly released housing data. According to Cash is All the Rage – A Closer Look at Condos Bought with Cash, the August 14, 2014 article, the level of recorded cash home sales in Minnesota encompassed 25 percent of all closings.

The percentage of cash homebuyers began to drop of in January 2013 according to CoreLogic. When taking a look at historical percentages found previous to housing’s tumble, then cash sales slice of total home sales was in the region of about 25 percent. Cash home transactions levels peaked in January 2011 at 46.2 percent.

Understanding Individual Categories of All-Cash and Other Housing Transactions

* Most of the institutional investor buys in the second quarter were all-cash purchases (79%).

* The percentage of homes sold that are not in any phase of foreclosure or bank-owned was 80%.

* How the last 20% breaks down: 7% were bank-owned housing transactions, 11% were on the docket for foreclosure auction, and 2% were in default in a status pending foreclosure auction scheduling.

Twin Cities Cash Homebuyers Have Greater Appeal

Cash home buyers continue to be more appealing to sellers. Individuals who are poised to purchase a property with cash are able to act quickly during negations and that the sale has less risk of funding denials or delays. “The flurry of purchases by institutional investors and other cash buyers that kicked off two years ago when U.S. home prices hit bottom is finally showing signs of subsiding,” said Daren Blomquist, RealtyTrac vice president. “Over the past 10 quarters cash sales have accounted for 39% of all home sales on average, and institutional investor purchases have accounted for 5.3% of all home sales on average.”

During the generational span of 2001 to 2011, the percentage of sold home per quarter each year that were purchased with cash was 30%; and the average quarterly institutional investor portion stood at 2.6%. As is typically of fluxuations within the housing market, making well informed decisions when buying a home happens for those who understand its ebbs and flows. Read our article on home buyer and seller advantages in 2014.

A Look at 1 Year Ago: Twin Cities Cash Homebuyers

Taking a look at where we were a year ago, "An increasing number of homes across the nation were changing hands in all-cash sales. And that is true in the Twin Cities," according to MinnPost. According to the Board of Realtors, which covers a 13-county area, 25.1 percent of buyers in March paid in cash. In fact, that share has held steady for the last two years, up from about 5 percent in 2006." The April 23, 2013 Go figure: 25% of Twin Cities home buyers paid in cash article comments on how the Twin Cities experienced home prices declines during the Great Recession, but had fewer market low/high swings like Phoenix and Las Vegas went through.

"The increase in all-cash home sales across the Twin Cities demonstrated the strength of the real estate market housing recovery. Buyers were quick to recognize the economic stability of the metro and to invest in buying a Twin Cities home because they felt confident their cash would accrue in value." ~ Jenna Thuening, owner of Home Destination

** Download RealtyTrac's article on All-Cash Homebuyer's Share of Residential Home Sales pdf

Whether your goal is to be an aggressive Twin Cities residential investor for the first time or are a move-up home buyer, call me at 612-396-7832. By partnering togehter you can be assured that buying a home will be a fun and rewarding experience - whether or not you are competing with cash homebuyers. Home Destination provides professional real estate know-how and execution to drive consistent results.

Jenna Thuening, a Jenna Thuening, owner of Home Destination Twin Cities residential Realtor reports on the how Twin Cities bidding wars subside with fewer cash home buyers activity.

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