This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Cash Still Rules Housing Market as Banks Freeze Out 3 in 10 Americans

NEW YORK (TheStreet) -- Cash buyers continue to drive the housing recovery, with higher mortgage rates leaving borrowers out in the cold.

According to the latest report from RealtyTrac, cash purchases accounted for 45% of the total residential property sales in August, up from 39% in July and 30% in August 2012.

In cities with a high proportion of distressed properties such as Miami, Detroit and Las Vegas, cash sales accounted for more than 65% of total sales.

U.S. residential sales sold at an estimated annualized rate of 5.6 million, up 2% from 5.5 million in July and up 12% from a year earlier.

The median price of properties sold rose 3% to $175,000 and up 6% from a year ago.

Still, while sales and prices are rising, housing recovery skeptics note that a large share is still being driven by cash buyers and institutional investors, while first-time homebuyers who are more dependent on credit are being left out.

Institutional investors -- non-lending entities that bought at least 10 properties in the last 12 months -- accounted for 10% of sales in August compared to 9% a year earlier.

Investor activity remains high as banks continue to work through the foreclosure process. The share of short sales rose to 15% in August, from 14% in July and 8% a year earlier. The share of foreclosure sales accounted for 10% of all sales, up from 9% a year earlier.

Foreign buyers are also big drivers of demand in cities such as Miami and New York, which could also explain the significant share of cash purchases.

Meanwhile, a separate note from Zillow Thursday morning points out that mortgage credit availability still remains tight.

Three out of 10 Americans are unlikely to qualify for a mortgage, according to Zillow Mortgage Marketplace analysis.

Zillow researchers analyzed 13 million loan quotes and 225,000 loan purchase requests in September 2013 and compared it to a similar study in September 2010.

Borrowers with a credit score of less than 620 who requested purchase loan quotes were unlikely to receive a loan quote in September, even if they offered a relatively high downpayment of 15% to 20%.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,019.17 -79.28 -0.46%
S&P 500 1,995.67 -7.70 -0.38%
NASDAQ 4,580.4850 +0.2140 0.00%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs