Shannon Stapleton/Reuters

In cities across the nation, cash-and-carry buyers are still gobbling up houses at foreclosure—and luxury—prices.

Here's the good news for the housing market: The forces driving up prices in metro areas all across the nation may be easing up ever so slightly. Here's the bad news: The middle class still can't afford to buy homes.

Almost 40 percent of all U.S. home sales in the second quarter of 2014 were all-cash purchases, according to the latest report from RealtyTrac.com. Just about 5 percent of home sales were purchased by institutional buyers—companies or entities that bought more than 10 properties over the course of a year. Both of these figures are down from the last quarter, and down still more so from 2012, when housing prices hit their nadir.

Although they're down slightly from Q1, these figures are still high enough to have a big impact on housing sales nationwide. For a handful of states, nearly half the home sales in Q2 were all-cash buys: Florida led the way (57.9 percent), followed by Michigan (49.7), New York (48.8), and Nevada (48.3). In Virginia, the state with one of the lowest figures, all-cash purchases still accounted for more than one-fifth of home sales (22.2 percent).  

No data were available for five states (rendered in white).

For many metro areas, big buyers are still driving home sales. Institutional investors bought up 15.6 percent of the homes sold in the Atlanta metro area in Q2, down just slightly from Q1 (16.5 percent). The Jacksonville, Knoxville, and Columbus, Ohio, metro areas saw big jumps in the share of house sales going to institutional investors.

(RealtyTrac)

In six metro areas—Las Vegas, Detroit, Kansas City, Philadelphia, Cleveland, and New York—almost half the new single-family and condo sales were all-cash sales. Which is incredible. Cash buyers are picking up homes at the high and low ends of the spectrum. They account for nearly half the luxury homes sold, but also well more than half of homes sold for under six figures. 

(RealtyTrac)

A couple of findings leap out from the report. Cities in Florida are getting jacked by big housing buyers. The six metro areas with the highest share of all-cash sales nationwide are all in Florida: Miami (64.1 percent), Cape Coral (62.1), Sarasota (61.5), Tampa (54.6), Lakeland (53.0), and Orlando (52.2). 

Another big trend: The people who are buying distressed homes are paying for them in cash. Almost half of bank-owned sales were cash purchases (49 percent). Home-owners who sold their homes during the foreclosure process in Q2 sold them to all-cash buyers most of the time (61 percent). Almost every home sold in an auction foreclosure was paid for in cash (96 percent).

For middle-class renters who might like to buy homes and can afford the mortgage payments (and that turns out to be many renters in many cities), the competition from corporate and wealthy buyers and investors is still too steep. Despite a dip from Q1 to Q2—and from 2012 to 2014—cash-and-carry buyers are still outperforming mortgage seekers. 

(RealtyTrac)

Credit can't compete with cash, especially when so many would-be buyers are already paying off student-loan debt. As long as a big chunk of the housing market is reserved for big buyers, whole classes of renters will be priced out of the American Dream.

About the Author

Most Popular

  1. Transportation

    How Seattle Bucked a National Trend and Got More People to Ride the Bus

    Three experts in three very different positions weigh in on their city’s ridership success.

  2. Design

    Experimental City: The Sci-Fi Utopia That Never Was

    With solar energy, recycling, computers, and personal mass transit, the 1960s-era Minnesota Experimental City was a prescient and hopeful vision of the urban future. A new documentary tells its story.

  3. Equity

    The Side Pittsburgh Doesn't Want You to See

    Pittsburgh filmmaker Chris Ivey has spent over twelve years documenting the lives of the people displaced so that the city can achieve its “cool” status.  

  4. Transportation

    If You Drive Less Than 10,000 Miles a Year, You Probably Shouldn't Own a Car

    Up to one-quarter of all U.S. drivers might be better off using ride-sharing services instead.

  5. Life

    Meet the High-Tech Buses of Tomorrow

    They’re zero-emissions. They drive themselves. And they’re longer than a blue whale. Can the humble city bus get a modern makeover?