Investors drive bigger share of Raleigh home sales; all-cash sales soar to 33% of deals

RALEIGH – Despite rising home prices, institutional investors are still buying homes in Raleigh’s metropolitan statistical areas.  In fact, new data shows that the share of homes purchased by institutional investors in the first quarter of the year was 11% higher than in the first quarter of 2021.  And about one in every three homes sold in the first quarter in the area were paid for in all cash, the data show.

ATTOM Data Solutions reports that the median home sale price across Raleigh’s metropolitan statistical area (MSA) was $300,000 in the first quarter of 2021.  But the median home sale price during the first quarter of 2022 was $393,000.  Prices have jumped 31% across the metropolitan statistical area in that time span.

Meanwhile, investor activity in the real estate market remains strong.  According to the ATTOM data, 9.2% of all homes sold during the first quarter of 2021 were bought by institutional investors, or non-human entities that bought at least 10 properties during the quarter.

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But in the first quarter of 2022, institutional investors bought 10.2% of all homes, an increase of 11%, across the Raleigh MSA.  The companies known as iBuyers are considered to be institutional investors within the ATTOM data set.

And more home purchases are being made in all cash, ATTOM’s data shows.  While 26.5% of sales were cash transactions during the first quarter of 2021, in the first quarter of 2022, 33% of homes were bought in all cash.  That’s an increase of 25%, ATTOM noted.

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Demand still high

Data released by the office of the Wake County Register of Deeds earlier this week calculated that the median price of all real estate transactions that occurred in the county during March 2022 reached a new high: $430,000.

That’s up $10,000 from February 2022’s data, when the median sale price was $420,000.

“Low inventory, population increases fueling more demand,” said Luther Snyder, deputy director of the office of the Wake County Register of Deeds.  “Demand still is high, supply is still low, there seems to still be a lot of buying power out there overall.”

Snyder told WRAL TechWire that it’s possible that many would-be homebuyers sought to place a home under contract during March due to increasing mortgage interest rates.

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It’s hard to buy a home

ATTOM’s data showed that, across the entire Raleigh metropolitan statistical area, which includes Wake County, Johnston County, and Franklin County, mortgages backed by the Federal Housing Administration, often called FHA loans, fell by more than 50% in the first quarter of 2022 compared to the prior year.

FHA loans enable homebuyers to finance a home purchase with low down payment amounts, as low as 3.5% of the agreed upon purchase price for a home.  But few homes in the Raleigh MSA are sold to homebuyers who have secured FHA loans to finance the property, ATTOM’s data shows.

“Investors are coming in and buying homes with all cash offers,” said Amy Nelson, executive director of the Fair Housing Center of Central Indiana, who was a panelist for a session during the virtual Fair Housing Community Conference in Raleigh and Wake County.  “Sellers are going with those instead of providing home ownership opportunities.”

In the first quarter of 2022, only 2% of all homes in the Raleigh MSA were bought using an FHA loan, down from 4.1% in the first quarter of 2021, ATTOM’s data showed.

It’s more expensive than ever to buy a Triangle home, and interest rates are rising, too