As the investors leave and find less expensive housing elsewhere and the lending restrictions ease we are seeing a strong trend back towards normal in financed home sales, although we are not quite there yet.
We can sometimes get too focused on counting houses instead of counting dollars. This is particularly true when looking at how homes are funded.
Here are the numbers for August 2013 and August 2012 based on Maricopa County Affidavits of Value (i.e. excluding HUD sales and trustee sales)
Those who only count units will see a 3.5% decline since last year and conclude that the market is weaker. However buyers spent almost 19% more on homes in August 2013 than they did a year ago. A market with revenue up 19% is hardly a weak market.
We also see that despite higher interest rates, it is financed purchases that are growing while cash purchases are down over 30% by unit and 13.5% by dollar volume. This is a big swing back to finance which has accelerated over the last 3 months. It would appear that loans are becoming easier to get. It also appears that cash is now starting to go out of fashion. Here is the trend for cash sales as a percentage of all sales over the first 8 months of 2013:
- Jan = 35.0%
- Feb = 36.3%
- Mar = 33.4%
- Apr = 34.3%
- May = 32.3%
- Jun = 30.4%
- Jul = 29.3%
- Aug = 26.7%
That’s a fall of 24.6% in 8 months. If we look at the dollar volume of all cash sales it has fallen even further – a 28.7% decline from a 31.8% share to a 21.9% share.
August 2013 had the lowest percentage of cash sales we have seen since December 2008. This is a big change in the market that no-one else seems to be commenting on yet.
*Contributing statistics, data, and commentary provided by ARMLS, Michael Orr, and the Cromford Report.