Cash still rules in area real estate

Cash buyers continue to dominate Southwest Florida's residential real estate market, according to a new report.

The Sarasota-Manatee region ranked third among major U.S. metropolitan areas with 65 percent of all home sales purchased with cash during the first quarter of 2014, according to data released Wednesday by industry researcher RealtyTrac.

In Charlotte County, the percentage was even greater. There, 83 percent of all home and condo sales in the quarter were bought using cash -- more than three times higher than in the first quarter of 2013.

Statewide, buyers paid cash for 64 percent of the homes purchased, nearly double from the 35 percent figure recorded a year ago.

Florida also was home to the top five cash-buying metro areas with populations above 500,000, RealtyTrac noted. Cape Coral-Fort Myers was first at 74 percent; Miami at 67 percent; Sarasota and Palm Bay at 64 percent; and Lakeland at 62 percent.

Bill Perrault, broker with Keller-Williams Peace River Partners, said Charlotte County has always had a high percentage of cash buyers, regularly accounting for up to two-thirds of sales.

The exception to that trend occurred from 2004 to 2006, when "pretty much anyone breathing qualified for a loan," he said.

"After the real estate bubble burst, it is no secret that getting a home loan went from easy as pie to being a very, very little piece of the pie -- even with extremely attractive interest rates," Perrault said. "Low interest rates don't mean anything to the folks who can't qualify.

"First-time home buyers were knocked out which, of course, directly relates to why institutional buyers came in, bought up properties to rent to everyone that could no longer qualify to buy a home," he said. "This caused rental prices to go up as supply and demand took hold."

Tighter credit standards and low home inventories have given the advantage to investors and other cash buyers, agreed Daren Blomquist, a vice president at RealtyTrac.

"The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers -- including individual investors, second-home buyers and even owner-occupant buyers -- to fill the vacuum of demand left by institutional investors," Blomquist said.

Though cash purchases remain prevalent, the influence of institutional buyers -- defined as entities buying at least 10 properties a year -- continues to ease in Southwest Florida.

They accounted for just 4.5 percent of all residential sales in Sarasota-Manatee in the first three months of the year, as compared with 5.7 percent in the prior period and 6.6 percent during the same time in 2013.

In Charlotte, institutions bought 15.8 percent of all homes traded in the first quarter, down from 23 percent in the fourth quarter but flat versus last year.

Statewide, those investors closed on 7.6 percent of home sales, down from 10 percent a year earlier.