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Declining Distressed Sales and Rising Cash Purchases

Tim Ford  |  Friday May. 30th, 2014

I was recently reading an article about the national decrease in distressed or foreclosure sales and the increase in cash purchases. This is an interesting national phenomenon because during the downturn in the Real Estate market, a lot of investors were purchasing distressed homes in cash. One would think that the decrease in sales of distressed homes would lead to a decrease in cash purchases, but this hasn’t been the case on a national level. After reading this article, I wondered if this trend held true in Bozeman, so I decided to take a look.  
On a national level in 2012, 26% of all residential sales were distressed sales, and 29% of all residential sales were cash purchases. In Bozeman, looking at single family homes, condos, and townhouse sales in and outside of Bozeman city limits, 15.9% were distressed sales, and 25.8% were cash purchases.  

In 2013, the number of distressed sales nationally fell to 17%, and cash purchases rose to 31%. In Bozeman, distressed sales fell to 5.7% in 2013, and cash purchases remained fairly steady  at 25.5%.  During the first quarter of 2014, distressed sales made up 15% of national sales and cash purchases rose again to 33%. In Bozeman, first quarter 2014 distressed properties fell even further to 3.6% and cash purchases rose to 31%.  

So, Bozeman has somewhat followed the trend of decreasing distressed sales and rising cash purchases. However, perhaps the most interesting note from this comparison is the drastic difference in distressed sales nationally versus here in Bozeman. The rise in prices across the valley has certainly led to a decrease in foreclosures and short sales.  

As usual, I have also included data for the number of homes sold during the first four months of 2014. In addition to the 210 homes sold during this time period, another 195 homes are currently pending, or under contract, as of the date of writing this article.

The included data reflects sales of homes on both less than and greater than 1 acre in the greater Bozeman area, including Four Corners, Gallatin Gateway, Bridger Canyon, and Bozeman city limits. The data includes home sales reported through the local Southwest Montana MLS, and does not include private party sales, Condominiums, or Townhouses.  

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