(Paul Owers) More than half of all South Florida home and condo sales in May were cash deals, but buyers who need mortgages shouldn’t lose heart, a new report shows.
Roughly 53 percent of transactions last month didn’t involve a loan. Yet that’s down from about 70 percent a year ago, the RealtyTrac listing firm said Thursday. The figures cover Palm Beach, Broward and Miami-Dade counties.
“It is slowly transitioning from a cash-is-king market to one that’s a little more friendly for traditional buyers,” said Daren Blomquist, a vice president of RealtyTrac, an Irvine, Calif.-based foreclosure listing firm.
Since 2000, cash buyers have represented, on average, a quarter of all home sales nationwide, RealtyTrac said. But cash became more prominent in recent years, particularly in South Florida, as investors flooded the market searching for deals after home prices hit bottom.
Hedge funds that once dominated the South Florida housing landcape are pulling back on purchases, the RealtyTrac data show. About 4 percent of all single-family sales in May went to institutional investors, compared with 10 percent a year earlier.
With investor demand waning, home price increases have slowed across the region. And that’s likely to continue as the market attracts more buyers who need financing, Blomquist said.
“Those buyers will be constrained by incomes, and that’s having an impact on home-price appreciation,” Blomquist said.
The transition back to mortgage financing comes as lenders loosen underwriting standards.
While requirements are still strict, particularly on mortgages backed by government-run companies Fannie Mae and Freddie Mac, more small banks and private lenders are entering the picture to give buyers options, mortgage brokers and real estate agents say.
“Slowly but surely, creativity is coming back into the market,” said Jim Flood, regional manager of Supreme Lending in Plantation.
Meanwhile, a decline in cash sales won’t affect just buyers. Sellers who came to rely on fast deals with investors will have to adjust, said Randy Bianchi, co-owner of Paradise Properties of Florida in West Palm Beach.
Unlike many investors, buyers who finance tend to live in the homes and will be more interested in making sure the properties are move-in ready, he said.
“Sellers are definitely going to have to start doing more updating,” Bianchi said.