In fact, so many investors are winning sales with cash and shorter closing timelines that they can offer lower bids, which may be may be depressing prices, especially on distressed sales, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

In December the overall proportion of cash buyers in the housing market surged to a record 33.2 percent, up from 29.6 percent a year earlier. Some 74 percent of investors used all cash to buy homes last month. Investors accounted for 22.8 percent of home purchases in December 2011, up from 22.2 percent a month earlier.

The combination of all cash and shorter closing timelines convinced many sellers to accept lower bids. The survey found that cash buyers are able to bid significantly lower - and successfully - on many properties because they offer a shorter and more reliable closing timeline. This is particularly true for bids on distressed properties, because mortgage servicers selling foreclosed properties or real estate owned generally prefer transactions that can settle within 30 days.

The total share of distressed properties in the housing market in December, as represented by the HousingPulse Distressed Property Index (DPI), continued at a high level of 47.2 percent, using a three month moving average. This is the 24th month in a row that the DPI has been above 40 percent.

While investor bids may not be the first offers accepted, they often end up winning properties after other homebuyers are eliminated because of mortgage approval or timeline problems. Appraisals below the contracted price are a common reason for mortgage denials. Most mortgage financing timelines are now in excess of 30 days.

Real estate agents responding to the survey commented on low bids from investors. “Investors usually offer 10 percent-20 percent below list up to a price of $250K. First time homebuyers are (offering) close to list (price) as are current homeowners. Investors want 2-4 weeks to close …Financing buyers end up with 6- 8 weeks plus to close,” reported an agent in Arizona.

“Investors are very aggressive and expect to see 15 percent-20 percent off list, they will close in 30 days or less and most are cash buyers. First time homebuyers are in a market that sometimes sell for over list price which is difficult ‘at first’ for them to understand,” reinforced another agent in California.

“In competitive offer situations, cash offers prevail for the most part because of the common knowledge of lender closing issues. Cash sales close in 21-30 days. FHA sales close in 45 to 60 days,” reported an agent in New Jersey.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

A new analysis of price tiers over the past five years by Clear Capital found that lower priced homes experienced declines of 45 percent on average, outpacing the national average of 39 percent.

Higher priced homes, however, have lost only 25 percent of their value since the crash. However, higher priced homes lost more real value. Dollar wise, higher priced homes lost roughly $120,000 worth of value, while lower priced homes lost an average of $60,000.

Alex Villacorta, Clear Capital’s director of research and analytics, said that higher prices homes held their value better during the initial decline in 2006-2007 and in the initial years that followed. More recently, demand for entry level homes by first time buyers during the tax credit period and by investors has

“The lower end was first to go in terms of values and the top tier held out longer,” said Villacorta. In time, more expensive homes lost value and have lost more dollar wise than lower tier homes, he said.

Clear Capital’s data includes REO saturation levels on a market by market basis, and Villacorta said recently they have seen prices in some markets establish an equilibrium between REO and fair market value properties on a price per square foot basis. When markets have reached a mid-point equilibrium between fair market and REO values the gap between price tiers shrinks diminishing the depressive effect foreclosures have on fair market properties and allowing all properties in a market to appreciate over time.

However other markets, like Atlanta, are currently seeing a surge of REO activity in greater volumes than ever, making it impossible for prices to reach equilibrium. As a result, they are diverging and the gaps between price tiers are growing larger, he said.

Villacorta said Clear Capital will release more data and a forecast in its year-end report next month.

That’s the thesis behind a new study from New Vista Asset Management, a San Diego-based provider of real estate services for banks and other sellers of foreclosed residential homes.

New Vista found that over the past three years the percentage of REO homes sold to owner occupant buyers has decreased in 18 of the nation’s counties hit hardest by foreclosures.

“Although, quarter-by-quarter, we have observed some market-specific increases, over the entire period, owner occupancy rates for REO sales have broadly weakened,” said Brian Hurley, New Vista’s president and chief operating officer. “With eleven consecutive quarters of data, we can look beyond both seasonality and the temporary impact of demand stimuli such as the homebuyer tax credit, and observe a clear pattern of decline.”

Hurley added that the pace and scale of decline vary widely across markets. In Los Angeles County, California, for example, the New Vista data shows 79.36 percent of single-family REO houses were purchased by owner occupants in 2009, compared with only 60.32 percent in the third quarter of 2011. Most counties covered by the study saw declines of more than five percentage points during the same period, with a few dropping more modestly.

Only one county included in the Index, Wayne County, Michigan, had an owner occupancy rate for single-family REO sales below 50 percent in 2009. By the third quarter of 2011, owner occupancy rates for REO sales in an additional four of the studied counties had fallen below 50 percent, including Maricopa County, Arizona; Osceola County, Florida; Miami-Dade County, Florida; and Clark County, Nevada.

Owner-occupant buyers are losing out to investors for several reasons. Many REO sellers are choosing lenders paying with all cash over buyers in the process of securing financing. New lending standards, higher down payments and extended approval times all make it more difficult for owner-occupants, especially first-time buyers and minorities, to secure financing in a timely manner to compete for affordable

Formerly the executive in charge of the California market for Stewart Title, Hurley became concerned when we heard stories about potential homeowners consistently losing out to investors. “I’m very familiar with many HUD studies that show the importance of homeownership to communities,” he said.

Hurley said New Vistas is publishing its study to respond to a growing focus on investor-driven solutions to the nation’s residential real estate crisis. “Several initiatives now under consideration promise to channel more houses to investors rather than to owner-occupant purchasers,” Hurley observed. “We timed the first release of our study to raise awareness of the community impacts that current REO disposition practices are already having. Bulk sales, drop-bid foreclosure auctions and proposals under review by FHFA promise to move more REOs out of local real estate markets and out of the hands of owner occupants, out of the reach of local real estate professionals, and out of the capital base of the communities themselves. Before the market adopts new strategies to address an expected surge in foreclosure volumes, we wanted the owner-occupancy impact of current approaches to be well understood.”

Hurley has no “tipping point” ratio of ownership to rental, but he will continue track the competition for REOs between investors and potential owner-occupants in the initial 18 counties. He plans to expand the number of markets and issue quarterly reports.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, investor purchases hit 22.3 percent of closed transactions for the month of October, up from just 19.6 percent as recently as July. For the past three months, investor participation has exceeded 20 percent, continuing a long-term trend of increased investor interest in the housing market.

All-cash sales accounted for 29 percent of purchases in October, little changed from 30 percent in September and 29 percent in October 2010; investors make up the bulk of cash transactions.

The National Association of Realtors reported yesterday that its survey of Realtors found that investors purchased 18 percent of homes in October, compared with 19 percent in September and 19 percent in October 2010. First-time buyers accounted for 34 percent of transactions in October, up from 32 percent in September; they were 32 percent in October 2010.

A combination of low home prices and growing demand for rental units make purchasing damaged Real Estate Owned (REO), fixing up the properties, and then collecting monthly rents, an attractive financial play, the Campbell survey reported. In October, average prices for damaged REO hit $101,100, the lowest price recorded in two years. In contrast, home prices for non-distressed residential properties averaged $266,700 in October. Distressed homes - foreclosures and short sales typically sold at deep discounts - slipped to 28 percent of sales in October from 30 percent in September (17 percent were foreclosures and 11 percent were short sales); they were 34 percent in October 2010.

One factor pushing down average home prices overall is the high proportion of distressed properties found in today’s housing market. The total proportion of distressed home sales, as represented by the HousingPulse Distressed Property Index (DPI), rose a full 4 percentage points to 48.4 percent in October, up from to 44.4 percent in September.

Meanwhile, the gap between the supply of distressed properties and their absorption by first-time homebuyers widened to 13.7 percentage points in October, from a reading of 8.8 percentage points in September. This shows that first-time homebuyers have become less active in the distressed property housing market.

“However, in some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” said NAR Chief Economist Lawrence Yun. “Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers. In addition, extending credit to responsible investors would help to absorb inventory at an even faster pace, which would go a long way toward restoring market balance.”

Demand for rental units remains strong. Campbell Surveys estimates that 61.6 percent of investor properties purchased during the month of October will be rented out, with the remainder being flipped.

“Investors are prominent in the city of Las Vegas. They both flip and rent and buy properties in bulk. Renting single family homes is an extremely viable option and seems to be a growing trend in the valley with the decreasing of prices. Our inventory is dropping so we are seeing more investors becoming aggressive with their offers,” reported a real estate agent from Nevada in the latest HousingPulse.

“Given the current conditions in the market here locally, many of the investors are purchasing homes to rent until the market turns around then possibly looking to sell in a few years. Yes, at this point renting homes is a better option than flipping because the gap between what an investor can buy a house, fix it and flip it does not cover the cost of re-selling it,” added an agent from California.

Greg Rand, CEO of OwnAmerica, downplays concerns over near term price declines and urges investors to take a long view of the opportunities.

“This is a long term investment,” said Rand, who differs with what he calls the “get rich quick” approach to investing.  “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve.  And they will.  The best profits in real estate accrue to long term investors who take a long term view.”

Rents are growing at a 5.17 percent annualized rate compared to a 4.72 percent at this time last year Assuming effective rent grows at the same rate in the next four months as it did in 2010, the full-year total would fall just below the historic highs of 2000 (6.18 percent) and 2005 (5.81 percent), according to a report from Axiometrics Inc., a provider of data and analysis on the apartment market.

With 1.4 million new renters this year, apartment construction can’t keep up with demand.  Tenants, especially former homeowners forced from their homes because of the economy, are increasingly turning to single family homes owned by investors, especially in high foreclosure markets like Las Vegas.

During this year, investors have accounted for between 20 and 40 percent of monthly existing home sales, according to surveys of Realtors by Campbell/Inside Mortgage Finance and the National Association of Realtors. Yet, the investor market share may increase even more next year.

A survey by Realtor.com in April found that by a three to one margin, investors plan to be more active in their local markets compared to typical homebuyers in the next 24 months, and 69 percent of investors say it’ll be easier to find properties in the near future.

Most investors are newcomers.  Fifty-nine percent (59 percent) said they’re new to real estate investing, with 33.5 percent considering their first investment purchase and 8.5 percent in the process of buying and selling their first investment property.  Another 17 percent said they just completed their first transaction and plan to make more.  Only 36.5 percent have experience in more than one property transaction.

Author of “Crash! Boom,” Rand argues that even in the Great Depression, owning real estate was always better than not owning real estate. Holding real estate for the long term has always been a formula for success and most family wealth has been accumulated by purchasing real estate and keeping it in the family for many generations. real estate plus time usually equals success.

There are 6 million people who went from being owners to being renters, Rand said. “The stars are aligned to make this the best time in modern history to be a landlord,” he wrote in his book.

A national survey of Coldwell Banker agents found that 87 percent of 1300 agents and brokers polled have Baby Boomer clients who already own or are looking to own an investment property.  Some 22 percent of agents report that at least half of their Boomer clients either own or are looking to own such properties.

“The baby boomer generation has driven the U.S. economy for years, and like many Americans, they may be anxious about their next real estate decision,” said Jim Gillespie, CEO of Coldwell Banker Real Estate. “I know baby boomers are a very diverse group and cannot be described in generalities, but our survey clearly indicates that those boomers who are financially secure are actively seeking to buy their retirement home, or a second home, and they are taking advantage of the opportunities and value available in today’s market.”

“Those who can afford to pay all cash for a property at 30 to 40 percent below what it was worth actually have a positive cash flow when they rent it out,: said Coldwell Banker President Jim Gillespie.  Gillespie is so strong on the importance of encouraging greater investment in residential real estate that he’s in favor of extending the depreciation period for real estate investments.

Bob Hamrick, chairman & CEO at Coldwell Banker Premier Realty in Las Vegas, said investors in his market, which may lead the nation in single family rentals, are buying properties based on the rental income they will generate, not necessarily for resale potential.

“There’s almost no timeline for resale.  Investors are looking at a 10 percent or greater return on their money that they can’t get anywhere else, knowing that down the road they’ll be able to sell a home they bought for $150,000 but someone else before them paid $450,000 for,” he said.

Families forced from their homes by defaults in the Las Vegas market are looking for single family homes and their only choice is to rent.  Over time they can repair their credit and save for a down payment to qualify again as buyers, he said.

Seven of the top ten markets in the nation whose media list prices are up year over year are Florida markets.  According to the latest data from Realtor.com, the world’s largest real estate site, Florida single family home and condo prices are zooming at the same time that the rest of the nation is still recovering from the first quarter’s double dip.

Unlike most sales and price reports which are surveys of a representative sample of transactions or indices based on just a few markets, Realtor.com’s report is based on the actual data from the 2.2 million listings in the 146 markets in its data base.  However, Realtor.com captures only the prices for which properties are listed, not actual sale prices.  Nor does it know when sales are closed, only when listings come and leave the site’s inventory.

August median prices in Fort Myers are up 33 percent from 2010. Miami is up 24 percent, Punta Gorda 20 percent, Sarasota-Bradenton 10 percent, Daytona 9.3 percent and Lakeland-Winter Haven 8.8 percent. Compare those increases to the national average increase for median list prices from all 146 metros tracked by Realtor.com: .46 percent.

These amazing year over year numbers are not simply the result of being compared to prices during the August 2010 nose dive following the end of the tax credit.  They are the real thing.  A handful of Florida markets have been leading the Realtor.com hit parade since the end of the first quarter.

With a high saturation of condos, resort, retirement and second homes, these markets were devastated by a combination of foreclosures evaporating demand.  Massive inventories of distress sales and slow absorption drove prices to peak lows.

Florida has a long way to go to get healthy.  The median property in a number of Florida markets has lost half its value or more since 2006.  The peak to trough price differential in many Florida markets is over 50 percent, among the greatest in the nation, according to Case-Shiller.  In Miami, for example, prices fell over 50 percent and didn’t trough until the double dip in the first quarter of this year.  Prices in Fort Lauderdale fell from 2006 at least 46 percent to 2010. Naples fell 52 percent.  Tampa, 43 percent.  Orlando, 51 percent.

It makes sense that at some point bargain prices like these in prime Florida markets will attract investors, both foreign and domestic, and there have been bargains indeed.  In Vero Beach, for example, the discount on foreclosures reached 53 percent in the second quarter; state-wide the media discount was 40 percent according to RealtyTrac.  By all accounts that seems to be the case. In several markets, notably Orlando, Sarasota, Lakeland and Miami, demand has been strong enough to bring supply and demand into close enough balance to reduce median time for listings in inventory by five to 25 percent.

Why then are markets like Jacksonville, Tampa and Orlando, where prices fell nearly as much as South Florida markets, not participating in the renaissance?  Discounts, deals and demand-such as it is-don’t tell the whole story.

The answer may be fewer foreclosures, and in turn, reduced inventory.  What differentiates markets like Fort Myers and Miami from Tampa and Orlando not just geography by a significant decline in foreclosure filings in South Florida that began early this year and reached 60 percent year to year decline in foreclosure activity in July and August.  Inventories are higher in northern Florida markets.

Miami-Dade County recorded 3,352 foreclosure-related actions in August, a 61 percent decrease from a year ago. Broward County had 2,806 foreclosure actions, a 63 percent decrease, while Palm Beach County recorded 2,035 foreclosure-related actions, a 66 percent decline, according to

During the second quarter of 2011, foreclosure actions plunged by 51 percent in the tri-county South Florida region compared to the same three-month period in 2010, according to a new report from CondoVultures.com, a site listing condos.

Fewer filings means fewer REOs are being listed, which has contributed to the significant reductions in inventories shared by all of the markets were pries are zooming.  Almost all have reduced their inventories in the past 12 months, some dramatically.  Since last year inventories of condos and single family homes are down 41 percent in Fort Myers, 47 percent in Miami, 32 percent in Punta Gorda, 33 percent in Sarasota, 32 percent in Daytona and 38 percent in Lakeland.

How long will the Florida phenomenon last?  Will double digit price increases discourage bargain hunters and encourage local owners to list their properties and dilute the inventory vacuum that has been behind the price?  Is the foreclosure fall off a result of servicer processing delays rather than fewer defaults?  Or is it just the beginning of a recovery trend in markets that have suffered most?

Perhaps Bank of America answered that question when it doubled its foreclosure filings in South Florida in August.  With a default rate well into the double digits, Florida still ranks number one in defaults.  Until the larger economic picture improves, it’s hard to believe the Florida price phenomenon will last much longer.

“Florida, particularly South Florida, is still in a real estate crisis and experts predict it will take a couple of years for Florida to win its battle over this downturn…Looks like there are going to be lots and lots of good bargains here in beautiful South Florida for those with the wherewithal to purchase them,” says Florida real estate attorney Rosa Eckstein Schechter.

Investor purchases of homes continued to decline for the third month in a row in July as investors were forced to adapt to new business models, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

Investor market share plunged to the lowest level in a year. The HousingPulse Survey found that the investors accounted for only 19.6 percent of home purchase transactions in July. That was not only down from a 23.0 percent investor market share as recently as April.

The latest HousingPulse Survey results showed the proportion of first-time homebuyers in the housing market rose to 36.9 percent in July, from 35.4 percent in June. Meanwhile, the HousingPulse Distressed Property Index (DPI) climbed to 46.2 percent in July from 44.7% in June, indicating a high percentage of foreclosed property sales and short sale transactions in the housing market.

The gap between first-time homebuyers and distressed property supply was 9.3 percentage points in July, unchanged from June. Given that home purchases by current homeowners do little to absorb the supply of distressed properties, the housing market is increasingly dependent on investors to pick up any slack in purchases by first-time homebuyers.

But the inability of most investors to resell homes in the current housing environment has put a damper on their participation in the housing market this summer. Campbell Surveys estimates that investors will ultimately rent out 48 percent of the properties acquired in the month of July 2011. A comparable figure for the month of July 2010 would have been investors renting out 28 percent of acquired properties.

Significantly, real estate agents responding to the July HousingPulse survey indicated that the debate in Congress over the U.S. debt ceiling negatively affected homebuyer activity last month.

“I spoke with several would-be buyers who, because of the ridiculous behavior of our government, felt uneasy about purchasing at this time. This may be contributing to the hot rental market,” reported an agent in Washington State.

“Investors seem to want to profit from the unease of owner-occupant buyers, but the economic problems cause them to make lower and lower offers,” observed an agent in Connecticut. “Investors were active, with cash to spend. Owner-occupants demonstrated fear and indecision,” added an agent in Texas.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

A study by Sean O’Toole of ForeclosureRadar found that third party investors are much faster at reselling foreclosures than banks, though the difference varies by area. In Oregon banks take an average 156 days longer to sell inventory than 3rd parties while in Washington it took banks only 52 days longer. California banks on average took 104 days longer than 3rd party investors; whereas Arizona and Nevada banks both took an average of 70 days longer to move inventory than 3rd party investors.

“Our statistics clearly show that real estate investors continue to far outperform banks in dealing with distressed properties,” says Sean O’Toole, CEO and Founder of ForeclosureRadar, “yet politicians and bureaucrats are putting pressure on banks to become landlords, which will hurt local economic activity, as fewer properties are made available to local investors, also impacting their Realtors, contractors, and property managers; as well as to home buyers in need of affordable housing.”

Foreclosure activity fell to a 44-month low in July as fewer homeowners default on their mortgages but banks continue to process foreclosures at an even slower rate, creating a form of extended Chinese water torture for housing markets.

A recent report from Lender Processing Services found that the average foreclosure now takes 587 days to process and resell.

Despite the downturn in overall foreclosure activity. lenders repossessed a total of 67,829 REO properties in July, a 1 percent decrease from the previous month and a 27 percent decrease from July 2010. The July REO total was 34 percent below the monthly peak of 102,134 bank repossessions in September 2010, RealtyTrac reported last week.

The latest quarter report from the National Association of Realtors found that first-time buyers purchased only 35 percent of homes in the second quarter, down from 46 percent in the second quarter of 2010, which was the height of the first-time buyer tax credit.

The latest HousingPulse Survey from Campbell Surveys and Inside Mortgage Finance also showed the proportion of first-time homebuyers in the housing market fell to 35.4 percent in June, down from 37.3 percent in May.

As first-time buyer purchases have fallen, the inventory of distressed properties has increased.  The HousingPulse Distressed Property Index (DPI) fell to 44.7 percent in June from 46.7 percent in May. The gap between first-time homebuyers and distressed property supply was 9.3 percentage points in June, nearly unchanged from the high 9.4 percentage points found in May. A year ago in June 2010, the gap between first-time homebuyers and distressed property supply was just 3.9 percent.

Yet price declines this year have made homes are affordable than ever. NAR’s Housing Affordability Index stood at 176.6 in the second quarter, the third highest on record after the first quarter of 2011 and fourth quarter of 2010. The index measures the relationship between median home price, median family income and mortgage interest rates; the higher the index, the greater household purchasing power. Recordkeeping began in 1970.

Why aren’t low prices stimulating sales?  NAR’s Lawrence Yun believe it’s the lenders. “With home prices in a broad trough and historically low mortgage interest rates, high housing affordability conditions and rising rents could stimulate a more rapid sales recovery if banks get back into the business of lending to more creditworthy borrowers,” Yun said.

NAR points to the rising market share of all-cash purchases, an indicator of investor activity, as a sign that investors are beating out first-time buyers for foreclosures.  The share of all-cash purchases was 30 percent in the second quarter, up from 25 percent in the second quarter of 2010. Investors, who make up the bulk of cash purchasers, accounted for 19 percent of second quarter transactions, up from 14 percent a year.

However, the credit noose seems to be affecting investors as well.  To buy and hold distressed property, investors must have access to cash or mortgage financing.  A recemt HousingPulse survey indicated that after a year of absorbing distressed property supply, investor cash is getting depleted. That leaves first-time homebuyers as the next group best able to absorb distressed property supply. But increasingly, first-time homebuyers have trouble qualifying under strict mortgage underwriting guidelines.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the key to healthy housing is credit access. “It’s frustrating for many creditworthy potential home buyers to realize that when they’re ready to make a move, banks remain risk averse,” he said. “People with good jobs, long-term plans and who are willing to stay well within their means deserve an opportunity to realize their American dream of home ownership. When banks return to normal and safe but sensible lending standards, housing will be able to contribute its traditional share to economic growth.”