Orlando Reigns Supreme in All-Cash Home Sales
Orlando’s housing market certainly had an interesting year during 2013. Home values jumped up significantly (none better than what was recorded in several of these distressed Orlando area neighborhoods) but what does this mean for all cash sales this year? A new report suggests that cash buyers are still hot for the Orlando housing market despite steeper prices.
The cities of Orlando and Tampa ranked in the country’s top metro areas for all-cash acquisitions at the end of 2013. RealtyTrac’s annual report showed that more than 50 percent of the home sales in these areas were done entirely in cash.
Florida Leads Nation in All-Cash Sales for 2013
On a state level, Florida beat out all other competitors in all-cash home sales with 63 percent of deals finalized in cash at the end of 2013. Nevada came in second place with 51 percent.
The vice president of RealtyTrac, Daren Blomquist, weighed in with his thoughts on the report. “We would have been expecting that pool of buyers to diminish,” remarked Blomquist. “But I think there’s just a very high appetite for these properties, even at the higher prices.”
Average home values were closing in on $175,000 (28 percent higher than last year) in the Orlando area. Home prices across the country increased by about 7 percent during 2013.
Cash Buyers Unfazed by Increased Home Prices
The relatively steep jump in home values seems to have not discouraged the institutional buyers in the area. In fact, they only upped their investment in Central Florida’s housing markets. The report shows that:
- Institutional investors comprised 12 percent of Orlando real estate buyers at the start of 2013.
- Institutional investors now account for 17 percent and growing.
So what’s the draw for these real estate investors? The pricier stock in Central Florida is still much more affordable than other competing markets that are hampered by a large concentration of distressed properties. The report showed a comparison of home prices in Las Vegas and Phoenix to Orlando:
- Average selling price in Las Vegas was $20,000 higher
- Average selling price in Phoenix was $40,000 higher
What Keeps Them Coming Back?
Blomquist also listed one other key reason that investors favor Orlando: future rental properties. They’ll continue buying property in Central Florida because they plan on renting many of them out. This way, they aren’t going to rely solely on the profits from re-sales.
Orlando Investors also pay a premium for foreclosed properties. Home buyers in other parts of the country paid 40 percent less on average for a foreclosed residence compared to traditionally listed properties. Home buyers in Florida were paying 31 percent less on average for these distressed listings.
That number was even smaller in the Orlando housing market– only a reported 19 percent discount on asking price. As Blomquist accurately points out, this is strong evidence that investors are actively competing for distressed listings.