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Don’t Believe the Housing Bubble Rumors — Unless You’re in These 7 Markets — The Motley Fool

The term “housing bubble” is thrown around right and left lately, but are we really at risk? Not unless you’re in these seven markets, says a new study.

Housing Bubble Rumors

Across the nation, rising home prices suggest a definite recovery from the 2008 recession — and there’s no doubt you’ve come across more than a few articles speculating on an impending real estate bubble.

But are we really in store for a collapse of the housing market? Only in certain parts of the country, says a new study conducted by real estate experts Norm Miller, Hahn Chair of Real Estate Finance in the School of Business Administration’s Burnham-Moores Center for Real Estate at the University of San Diego (USD), Michael Sklarz, president of Collateral Analytics and Jim Follain, senior vice president for research and development at Collateral Analytics.

Pooling new research from almost 400,000 neighborhoods and 20,000 surrounding zip codes across the country, Miller and his co-authors detail their findings in a white paper called, “Is a New Home Price Bubble Forming?” In the study, they focus on defining the characteristics of a “bubble” and finding economically sound ways of evaluating the intrinsic value of homes so as to take a more accurate look at where we are in terms of market sustainability.

Their findings uncover strong correlations between an area’s industry and its real estate market’s volatility. “In markets where wealth is volatile, say for markets with a heavy concentration of recently successful tech start-ups, changes in the value of these companies could also be considered a volatile factor driving prices,” states the research paper. “Changes in incomes, on the other hand, rarely change rapidly and are less likely to trigger rapid price declines except in markets with little industrial diversification.”

What does this mean for specific markets?
Miller cautions against the abounding use of “bubble” when describing the U.S. real estate market as a whole. True real estate bubbles, he adds, are more rare than may be commonly believed:

[A] reason why we do not use the term ‘price bubble’ freely is that real ones are very infrequent. Examples of real bubbles include, stock prices in 1929, 1987, and NASDAQ stocks in 2000, gold and silver in 1980, Japanese land and real estate prices in 1989-90, and, of course, home prices in the U.S. in 2005- 2007. Based on these rare examples, it is reasonable to say that true bubbles only occur on average once in a generation.

Still, several specific markets may have reached levels of unsustainability. Factors that drive this volatility include neighborhoods with low equity and high loan to value ratios, median household income, the value of the U.S. dollar against foreign currency, demand for coastal housing with limited supply and dependence on low interest rates.

The study cites the following areas as at risk for near-bubble levels, in part due to reliance on tech capital and rapidly changing valuations of start-up industry:

  • Miami, FL
  • Denver, CO
  • Portland, OR
  • San Diego, CA
  • Oakland/Berkeley, CA
  • San Francisco, CA
  • San Rafael, CA

U.S. housing as a whole remains sustainable
Miller and his team focused specifically on the neighborhood level, he says, because when markets collapse, they tend not to do so evenly across metro areas. Rather, looking at localized areas is key to getting accurate housing data.

And while some specific areas are inflated (and this could be seen as more of a “tech bubble” than a “real estate” bubble, where declines will likely be driven by falling stock prices), the U.S. as a whole is not on the precipice of a burst real estate bubble, Miller says.

“Our analysis based on a number of approaches we have used over the years to identify home price bubbles is that we are far from bubble territory on a national or metropolitan level and that anyone claiming otherwise is looking to sensationalize an issue which does not exist.”

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey

The latest survey was released last week. Here are the results:

  • Home values will appreciate by 4.5% in 2014.
  • The average annual appreciation will be 3.94% over the next 5 years
  • The cumulative appreciation will be 19.7% by 2018.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of almost 11% by 2018.

2.4 BlogBased on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five reasons purchasers should consider buying before the spring market arrives:

Supply Is Shrinking

With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy.

Price Increases Are on the Horizon

Prices are projected to appreciate by over 25% from now to 2018. First home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.

Owning a Home Helps Create Family Wealth

Whether you are rent or you own the home you are living in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Fed, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.

Interest Rates Are Projected to Rise

The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the this time next year. That is an increase of almost one full point over current rates.

Buy Low, Sell High

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be next year. It’s time to buy.

Home sales are up in New Jersey, but the number of properties on the market continues to fall. Meanwhile, prices have leveled off.

According to the Otteau Valuation Group, home sales last month rose 23 percent over the previous November, marking 26 consecutive months of sales increases. Overall, home sales in 2013 rose more than 17 percent. Over the past two years, home purchases are up 24 percent.

At the same time, however, the availability of homes for sale has fallen. The number of “for sale” signs is at its lowest since 2006, according to Otteau, dropping by 5 percent over the past year and 25 percent since 2011. In terms of inventory, New Jersey had a 13.3 month supply of homes for sale in 2011, as compared to 8.1 months now.

Home prices also have stabilized. The monthly Case Shiller Home Pricing Index released today showed the cost to buy a home in the New York Metropolitan area was unchanged from September to October. Year-to-date, prices have risen 4.9 percent in the region.

“Monthly numbers show … the boom is fading,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.

“The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates,” he said. “Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices.”

Average fixed mortgage rates are about 4.47 percent in the Northeast, up from 3.38 percent one year ago.


2014 PredictionsMaking predictions in what is still a somewhat volatile housing market can be tricky. That being said, we are going to give you what we believe will be the five biggest headlines for housing in 2014.

Home Sales Will Surge

Many housing pundits are calling for home sales to do slightly better in 2014 than they did in 2013. To the contrary, we strongly believe that home sales will skyrocket with increases of 10-15% in 2014.

Supply Will Struggle to Keep Up with Demand

With a dramatic increase in demand, it will be up to real estate professionals and builders to make sure there is the necessary inventory to satisfy this demand. This will be a challenge for much of the year.

Interest Rates Will Increase Significantly

Most experts are calling for an increase in mortgage interest rates in 2014. However, we believe the increase will be more dramatic than is being projected. We believe rates will be closer to 6% than 5% by year’s end.

Consumers Will Demand More from Real Estate Professionals

Home search will become a given to the real estate consumer in 2014. In order to differentiate themselves from other agents, real estate professionals will need to bring strong, meaningful content to the table in all their offerings

Go Mobile or Go Home

Any content strategy the industry contemplates must have a mobile component. All information will be accessed 24/7 in every conceivable environment. The professionals who understand and act on this will dominate 2014.

What are your thoughts for our market?

Buyers are swarming. Inventory is low. So what are you waiting for? Experts say there may be no better time than now to post that for-sale sign.

Sell Your Home                  

 Real estate agent Eileen Opatut was sizing up the market for a couple who had decided to sell after 23 years in their Montclair home. Her clients, whose two grown children had not lived in the house fulltime for five years, were finally ready to downsize. Opatut knew there was strong demand for midsize homes in Montclair, but this four-bedroom former carriage house on a side-facing lot could strike some potential buyers as offbeat.
The homeowners, Anne-Marie Nolin and Bob Adler, had imbued the house with plenty of charm. Buyers would appreciate the floor-to-ceiling shelves in the living room and a windowed wall overlooking the decorative garden. The kitchen was a bit on the cozy side and two of the bedrooms were small, but the 3,300-square-foot house had three full baths and two half baths, and it was tucked away in a neighborhood where conventional colonials can go for as much as $1 million—or more.
Opatut advised her clients to price it conservatively, at $589,000, to bring in as much traffic as possible. The tactic worked even better than she hoped.
“Buyers were flocking,” Opatut says, “and yes, they all had the down payment together.” The house garnered four offers in the first week, three of them for more than $600,000.
As Opatut’s clients discovered, in many New Jersey neighborhoods, now is a great time to sell. In today’s suddenly hot markets, there simply are not enough desirable homes available to meet the pent-up demand of potential buyers eager to pounce before mortgage rates inevitably begin to rise.
Opatut, an agent with Keller Williams NJ Metro Group, has a personal reason to be buoyed by the strengthening market. She and her spouse, Joan Garry, have themselves decided to downsize, now that their kids are out of their ample seven-bedroom, 4-½-bath Montclair home. They plan to put the house on the market this spring.
“There are clearly more strong buyers than great houses on the market right now,” Opatut says. “Every seller gets to ride that wave as long as it lasts.”
Experts concur that New Jersey real estate is recovering strongly. After years of crisis and stagnation, sales volume is sharply up, and prices are rising.
In 2013, the median home sales price rose by a projected 5 percent statewide, according to East Brunswick-based market analyst Jeffrey G. Otteau, publisher of the oft-quoted Otteau Valuation Report. The increase occurred despite Superstorm Sandy, which dragged down the selling price in devastated Shore communities by as much as 7 percent in 2013.
What’s more, the fourth quarter of 2013 was on track to be the most active sales period in the state since 2007, Otteau says. In October alone, home sales were up 19 percent compared to October 2012—and this despite the 16-day government shutdown that month.
Otteau says these positive trends—more homes selling and prices rising—should continue for at least 12 to 24 months. Still, he warns that uncertainty in the national economy and the potential reduction of federal stimulus programs could sour the marketplace.
The hottest markets the past year generally have been traditionally desirable suburban towns in North Jersey, such as Chatham, Glen Ridge, Glen Rock and West Caldwell, each of which, Otteau says, saw selling prices for homes gain an average of 8 percent for the past 12 months. At least one urban market, the condo haven of Hoboken, enjoyed a similar gain.
In all these communities, tight inventories are helping drive up prices. According to Otteau’s projections, Glen Ridge has only 1.7 months of inventory in the past year (that is, homes for sale in relation to anticipated demand). Glen Rock has 2.2 months of inventory; Chatham, 2.1; Hoboken, 2.3; and West Caldwell, 2.8. Other North Jersey towns identified by Otteau with limited inventory (2.9 months or less) include Summit, Montclair, Wyckoff, Maplewood, Midland Park and North Arlington.
Central Jersey as a whole has not been as active as North Jersey. “It’s picked up a little bit here, gotten better over the past two years,” says Charles J. Hendershot, a veteran broker in Bernardsville. “I think it will be a little longer before we see price hikes except in very, very select communities.” Hendershot, who is with Exit Realty, says the market for homes priced over $1 million is “absolutely dead” in his town, although it is showing some life in Basking Ridge. The only bidding wars in the area, he says, are for condos and town homes under $300,000.
Some Central Jersey towns did have show a healthy 7 percent average price gain in 2013, according to Otteau. They include Bedminster, Bernards Township, Fair Haven, Little Silver, Metuchen, Milltown, Plainsboro and Rocky Hill.
The marketplace is slowest in South Jersey, where unemployment has persistently run higher than the state average, which is itself higher than the national average. But even in the southern counties, certain real estate pockets are heating up, such as Mount Laurel in Burlington County and Manchester in Ocean County, where prices in 2013 rose 5 percent and 7 percent, respectively. In rural Gloucester County, Logan Township saw a 5 percent rise in home value that matched the statewide gain, according to Otteau. In the desirable Moorestown area—a Burlington County suburb about 15 miles east of Philadelphia—bidding on choice listings is often intense, says Pam Engle of Century21 Alliance. “There has really been a turnaround in the last six months,” she says. “It is still a market where the houses need to be perfect—ready to move in—and priced right at the asking.” But in early November, when the market usually goes quiet, Engle had one buyer who had just lost out on three mid-priced houses—in Moorestown, Riverton and Haddonfield—and another buyer who was outbid on two $270,000 single-family homes in Delran.
As hot as the market is, some potential sellers are still dragging their feet, hoping to take further advantage of rising prices. Analyst Otteau says this is not always the best strategy. Currently, he says, New Jersey is in a “window of opportunity”—that is, a period when homes are affordable.
but the time when a seller can capture the most value is much more likely to be now than later, when prices normalize at a higher level that is less affordable to the average buyer. s median income of $66,692 could afford a house or condo priced 24 percent higher than the median home value at the time, $299,140. Later in the year, the index remained strong, although it had dropped to 114 percent as the median sales price rose to $315,693.
That type of buying power—and continued low interest rates—has fueled a two-year surge in home sales across the Garden State. The New Jersey Association of Realtors says sales volume for the 12 months ending September 30 was up 18 percent compared to the previous 12 months. Otteau, who issues monthly market reports to brokers and every spring and fall runs seminars on industry trends, says sales volume over the past two years increased by an amazing 43 percent over the previous two years.
Otteau warns that the window of affordability could close before the end of 2015 as prices and mortgage rates make a slow but inevitable climb. “Every 1 percent rise in the mortgage rate equates to about a 9 percent increase in purchase price,” says Otteau. “That is what it feels like to a buyer confronting the higher rate.”
Ken Baris, who runs Jordan Baris Real Estate based in West Orange, the firm founded by his father 61 years ago, predicts prices will indeed continue to rise, albeit slowly. He also thinks the next year or two will be the best time to sell—unless you can wait a really long time, five years at minimum, for prices to return to the peak level of 2006.
“The train is pulling out of the station” for buyers seeking affordable homes, Baris says. These buyers “will have to start running and try to jump on the train before it gets to full speed.” Yes, there could be some hiccups in the market—periods when prices remain static or even drop a bit—but Baris says a reversal in the upward spike is highly unlikely.
He advises buyers to dismiss any regrets they might have about not snatching up a bargain when the market tanked from 2007 to 2009. “I can tell you the bottom for prices has passed. I can tell you some people paid lower prices. But that’s a timing game. That’s just a lot of luck….If you are moving up, it is clearly better to do so now, rather than to wait. If you are buying a more expensive house, you want to do it before prices rise further.”
Otteau predicts sales prices again will rise roughly 5 percent in 2014. Slow-but-steady appreciation is a good thing, he says—it keeps the window of affordability open as long as possible. Once the average buyer can no longer afford the average-price home, Otteau explains, the marketplace becomes dependent on other factors, such as rapid economic growth and the creation of new high-paying jobs. “They’re working on it,” he says of the Christie administration, “but this is a really long, really difficult battle.”
When the market was down just a few years ago, many thought it inconceivable that price wars would ever return, but that is exactly what is happening in quite a few towns around the state.
It certainly has been so in Glen Ridge, a perennially sought-after Essex County borough of 7,500 with top-rated schools, direct train service to Manhattan and quiet streets illuminated by working gas lamps. Roberta Baldwin, a broker with Keller Williams NJ Metro Group, says the average sales price in Glen Ridge last year was $654,689. Nevertheless, multiple listing figures show that 100 percent of the homes there sold for the asking price or more.
“Gen X and Gen Y buyers are stacked six deep to buy, once one of their friends buys here and they hear about it,” Baldwin says.
Maplewood is another in-demand Essex County community. Baris says 40 percent of homes listed in the town of 23,000 in the last 12 months sold within a month for over listing price. The average sales price was $475,000. In neighboring South Orange, where average sales price was $534,000, about a third of the homes sold within the first month for full asking price, but not over.
Baris points out that in the suburban communities, the most in-demand homes tend to be in the most highly regarded school districts. Other brokers and market specialists describe a growing breed of home buyer: those without children. For these buyers, both young professionals and empty nesters, proximity to mass transit and a short commute are high priorities. The latest Nielsen/Claritas demographic report says that 65 percent of households in New Jersey have no children under 18.
That explains the strength of certain towns in Hudson County, where the commute to Manhattan is notably quick and easy—and home values rose 22 percent in 2013. There, 93 percent of sales in 2013 were townhomes and condos, including a penthouse condo at K. Hovnanian’s 77 Hudson waterfront tower in Jersey City, which went for a record-setting $2.8 million in October.
Of course, not all of New Jersey is riding the same wave. Superstorm Sandy’s arrival in October 2012 depressed much of the Shore market, particularly in hard-hit sections of Monmouth and Ocean counties.  Mantoloking has recently staggered under as much as 18 months of inventory; in Loveladies, it’s 24 months, although the situation is starting to ease as buyers step up to snag bargains, Otteau says.
New Jersey’s four southernmost counties—Cumberland, Salem, Atlantic and Cape May—are still in the grip of a foreclosure crisis that is actually growing worse  even as other parts of the state—and even more so, the nation—get ready to kiss that problem good-bye. Last spring, researchers from Rutgers University reported that the Vineland-Millville-Bridgeton area of Cumberland County had the highest rate of foreclosures and delinquent loans of any large metropolitan area in the country.
Unemployment in Salem and Cape May counties continues to hover above 8 percent, reflecting the statewide rate, which is 1 percentage point higher than the national rate of slightly more than 7 percent, according to the U.S. Deparment of Labor. But in Atlantic and Cumberland counties unemployment tops 11 and 12 percent, respectively.
Other nightmares could be waiting in the wings. Proposed federal tax reforms could eliminate all second-home income tax credits. (“That could finish off the Shore market,” says Otteau.) Federal stimulus programs could be halted, possibly slowing economic growth nationwide. Or another superstorm could strike; who knows? Extreme weather and flooding promise to pose escalating threats and uncertainty as the millennium unfolds.
These dark clouds could provide more reasons to sell soon. “As long as nothing crazy happens with the economy, things should continue to look up,” says Engle, the Moorestown broker. It’s an optimistic take, but in the current real estate market, it is also the prevailing wisdom.


WASHINGTON (AP) — U.S. developers received approval in October to build apartments at the fastest pace in five years, a trend that could boost economic growth in the final three months of the year.

Permits to build houses and apartments were approved at a seasonally adjusted annual rate of 1.034 million, the Commerce Department said Tuesday. That’s 6.2 percent higher than the September rate of 974,000 and the fastest since June 2008, just before the peak of the financial crisis.

Nearly all of the increase was for multi-family homes, a part of residential construction that reflects rentals and can be volatile from month to month. Those permits rose 15.3 percent to a rate of 414,000, also the fastest since June 2008. Plans for construction in the U.S. south drove much of the increase.

Permits for single-family houses, which make up roughly two-thirds of the market, rose 0.8 percent to a rate of 620,000. That’s still slightly below the August pace of 627,000. And it suggests that higher prices and borrowing costs are weakening buyer demand.

Data on homes started in October and September were not included in Tuesday’s report. Those figures have been delayed because of the government shutdown and will be released on Dec. 18 with the November home construction report.

The increase in permits suggests those figures will rise. And it indicates that “housing construction will make a much bigger contribution” to economic growth in the final quarter of the year, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

But the sales of single-family homes could soon slow in the coming months, if developers don’t see greater demand soon, Shepherdson said.

“The flat trend in single-family is ominous,” he said in a client note.

Construction of apartments has increased in the aftermath of the Great Recession, as the rate of homeownership has fallen from its 2006 peak of 69 percent to 64 percent. Lingering unemployment and stagnant incomes for millions of Americans have increased demand for rentals, which are at their lowest vacancy rates since early 2001.

Builders are also benefiting from a low supply of homes for sale, which has increased prices for sellers.

The rise in permits also suggests builders mostly shrugged off the partial government shutdown, which lasted from Oct. 1 through Oct. 16. The shutdown was blamed for delaying the release of the October and September housing data. And it continued to effect the government’s reporting on homes started for those months.

Most economists expect the housing recovery will withstand an increase in borrowing costs. But the higher costs have slowed home sales in recent months.

Fixed mortgage rates have risen almost a full percentage point since late May, when borrowing costs were near record lows. Last week, the average on the 30-year loan was 4.22 percent, according to mortgage buyer Freddie Mac.

Mortgage rates are still low by historical standards. And steady job gains have made it possible for more Americans to buy homes.

Homebuilder confidence tailed off slightly after the government closed in October, according to a survey by the National Association of Home Builders. Their optimism flagged slightly out of concern that the shutdown and possibility another fiscal crisis at the start of next year will keep potential homebuyers on the sideline.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.–finance.html

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey

The latest survey was released last week. Here are the results:

  • Home values will appreciate by 4.3% in 2014.
  • The average annual appreciation will be 4.2% over the next 5 years
  • The cumulative appreciation will be 28% by 2018.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 16.8% by 2018.

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Nearly half of all home purchases in the month of September were paid for in cold hard cash, as tight lending conditions continue edge out traditional buyers and investors continue to scoop up inventory.

All-cash deals accounted for 49% of sales across the U.S., according to a new report from RealtyTrac. That’s up from 40% in August and 30% in September of 2012.

“The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash,” says Daren Blomquist, vice president at RealtyTrac.

The Irvine, Calif.-based real estate site’s latest U.S. Residential & Foreclosure Sales Report shows that, nationwide, residential properties sold at an annualized pace of 5.67 million homes per year, up 2% from August and up 14% from a year ago. The numbers from Realtytrac, which tracks activity for both distressed and non-distressed transactions using recorded sales deeds and loan data across 38 states, come in higher than the 5.29 million annualized pace posited by the National Association of Realtors in its Monday existing-home sales report.

While higher mortgage interest rates have caused some traditional consumers to shy away from purchases in recent months, cash-flush investors, from mom-and-pop landlords to Wall Street firms, have remained exceedingly active. In September institutional investors accounted for 14% of all sales, a new high since RealtyTrac began tracking this emerging demographic, defined as buyers who have acquired 10 or more properties over the past 12 months, in January 2011.

Institutional buyers, whose financing come from all reaches of Wall Street, have exploded onto the market in the past two and a half years, typically acquiring distressed inventory to rehab into income-producing single-family rentals.  Private equity firms, hedge funds, and Real Estate Investment Trusts have funneled an estimated $20 billion into the housing market over the past several years, acquiring upwards of 200,000 houses to rent out to the ever-growing legions of Americans who, for a variety of reasons, can’t or don’t want to take out a mortgage and buy a home themselves.

Blackstone Group’s Invitation Homes is by far the largest landlord in this arena, having spent $7.5 billion on an estimated 40,000 houses over the past two years. Other companies like American Homes 4 Rent, American Residential Properties, and Silver Bay Realty Trust SBY -0.32% have snapped up thousands of homes and bundled them into public offerings as single-family rental REITs.  Still others, like Five Ten Capital, have accessed nine-figure credit facilities from Deutsche Bank DB -0.77% with the longer term plan to securitize the debt. And according to Bloomberg Bloomberg, Deutsche Bank could begin marketing $500 million worth of bonds backed by Blackstone’s massive portfolio’s rental income as soon as this week.

Distressed transactions, comprised of homes in foreclosure or bank-owned, accounted for 25% of all sales last month, up from 18% a year ago. Nationwide the median price of a distressed sale was $112,000 — 41% below the $189,000 median price of a non-distressed property.

“Distressed sales remain persistently high, particularly short sales,” explains Blomquist. “Markets with the biggest increases in short sales tend to be those where either foreclosure starts or scheduled foreclosure auctions have rebounded in the last 18 months — translating into more motivated short sellers — or those with a still-high percentage of underwater homeowners with negative equity.”

Unsurprisingly those markets also log the highest rates of investor activity. Whereas hard hit western Sun Belt markets like Phoenix, Ariz. and Southern Calif. were hot spots in 2011 and 2012, institutional buyer activity has moved east, into the Midwest and into the Southeast. Metro areas like Atlanta (29%), St. Louis (25%), Jacksonville, Fla., (23%), Charlotte, N.C., (17%), Memphis, Tenn. (16%), Richmond, Va., (15%), and perhaps surprisingly, given both the low-barrier cost of construction and relatively strong economy of Texas,  Dallas (15%), and San Antonio  (15%). Another market that’s welcomed a second wave of investor interest is Las Vegas (27%), thanks to what Blomquist calls a “recent rebound” in foreclosure activity.

Of the metro areas touting populations of one million or more, eight have housing markets in which more than 50% of all sales transpire in cash. Distressed deals comprise at least one-third of monthly sales in all of these markets as well. Several, like Las Vegas (62%), Jacksonville (62%), Atlanta (54%), and Memphis (51%), can chalk up some of that cash flow to institutional buyers.

Others, like Miami, Fla., where a hefty 69% of deals are all-cash, can in part also thank foreign buyers. Miami’s market, despite the fact that its luxury inventory has been trading at record prices, is still working through a large foreclosure glut: 43% of sales in September there were distressed.