Rebound Continues: Housing Markets Back to normal in 52 Metro Areas

Housing markets in 52 out of the approximately 350 metro areas nationwide have now returned to or exceeded their pre-recessionary levels of activity, according to the newly minted National Association of Home Builders/First American Leading Markets Index (LMI), released recently.

The index’s nationwide score of .85 indicates that, based on current permits, prices and employment data, the nationwide housing market is running at 85 percent of normal activity.

Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.41 – or 41 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Harrisburg, Pa. – all of whose LMI scores indicate that their housing markets now exceed previous norms.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning that their housing markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Casper, Wyo.; Bismarck, N.D.; and Florence, Ala., respectively.

“This index helps illustrate how far the U.S. housing recovery has come, and also how much further it has to go as we continue to face some significant headwinds in terms of credit availability, rising costs for lots and labor, and uncertainties regarding Washington policymaking,” says NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of activity. More than 350 metro areas are scored by taking their average permit, price and employment numbers for the past 12 months and dividing each by their annual average over the last period of normal growth.

For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

“Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI,” observes NAHB Chief Economist David Crowe. “This is very much in keeping with the results of our previous index for improving markets, and is an indication of the extent to which local economic conditions dictate the strength of individual housing markets.”

“The housing markets of 118 metros scored by the LMI this month show activity levels of at least 90 percent of their previous norms – a very encouraging sign of things to come,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

Top 10 Towns with Turnaround Housing Markets

By  ILYCE GLINK / 
MONEYWATCH/ November 2, 2013, 6:50 AM

Talk about a turnaround.

Home prices in these 10 cities have jumped as much as 44 percent over the past year, driven upward by small supply and big demand.

The evidence for both lies in inventory. In these places, the number of homes for sale is shrinking, but so is the time they spend on the market.

"When inventory is low and age of inventory is low, that means there are more buyers out there snapping up properties at the price point offered so homes aren't sitting on the market," said Leslie Piper, Realtor.com's consumer housing specialist. "That's the balance you want."

Nationally, inventory has dropped 3.3 percent, but even more telling is the drop in age of inventory, which has declined 17.7 percent in the third quarter of 2013 over the same period last year, according to a Realtor.com Turnaround Towns report. Typical homes spent about 84 days on the market between July and September, while last year they spent 102 days on market.

So the 10 towns on this list have seen big jumps in the median list prices, as well as drops in the amount and age of inventory, meaning that these housing markets are undergoing a major recovery and are doing it quickly.

But that doesn't mean they're in the clear: Some, such as Las Vegas, still have a long way to go before the huge swath of homeowners affected by the crash recover their original home values, if they ever do. And others, such as Boston, may be affected by the lack of affordable housing options in the coming months.

But at least for now, things are looking up for the housing market in these 10 towns.

10. Las Vegas

Las Vegas has long been the poster child for the housing boom and bust. Some estimates saw home values drop more than 70 percent across town. But over the past year, Vegas has gained back 30.8 percent of home values, taking the median list price from $129,000 to $169,000. The number of homes available for sale is decreasing 16.9 percent and the overall age of the stock is also decreasing 23.5 percent.

9. Boulder, Colo. area

Boulder's list price is up 12.5 percent from last year -- from $319,000 to $359,000 -- and is driven by tight inventory. The inventory of homes for sale declined 18.1 percent since last year and age declined 35 percent. Those drops were amplified by massive flooding this September, further limiting the number of homes for sale.

8. Boston area

The greater Boston area is one of the nation's healthiest real estate economies, and it was barely affected by the housing crash. Even so, Boston's list price is up 9.5 percent from $314,900 last year to $344,900 today, while inventory is down 22.1 percent and the age is down 30.7 percent. However, with median list prices that high, affordability has become a major issue and may hamper price growth in the future.

7. West Palm Beach/Boca Raton, Fla.

Even though they are two of the wealthiest resort areas in the country, West Palm Beach and Boca Raton have had a particularly rough go of it in the past few years. But Florida is starting to follow California on the path to recovery and this area is no different.

Inventory fell 20.7 percent since last year, and the age of inventory also dropped 21.8 percent. Home prices climbed 17.4 percent to $229,000 from $195,000 last year.

6. Dallas

Dallas was one of those rare towns like Boston that didn't have much of a housing boom or bust. Because it didn't fall much, it didn't need to recover much.

Nonetheless Dallas saw prices rise 10.6 percent over last year -- from $189,000 to $210,000 -- and inventories are down 15.72 percent while the age is down 32 percent. But inventories actually rose from the second quarter to the third quarter this year by 3.1 percent, so that may dampen home prices.

5. Ann Arbor, Mich.

Known primarily as the home of the University of Michigan, this smaller city's housing recovery has been led by both shrinking inventory and a strengthening economy. Inventory has decreased 13.5 percent while the age has dropped 28.7 percent. Home prices are up 15.2 percent from $164,900 to $190,000.

4. Fort Lauderdale, Fla.

Down 13.8 percent this quarter compared to year-ago levels, Fort Lauderdale's inventory shortfall has lit a fire under once-lagging prices. The region is experiencing a more buyer-leaning marketplace, with reports of sellers in Fort Lauderdale offering incentives to purchase, such as seller contributions to buyers' closing costs and allowances for upgrades and renovations, according to the Realtor.com report.

That appears to be working to some degree, as inventory age dropped 35 percent over last year and home prices grew 15.8 percent, from $155,000 to $179,500.

3. Reno, Nev.

Although Reno has always stood in the shadow of Las Vegas, its recovery is standing out on its own. Home prices have risen 28.2 percent from $195,000 to $249,900, meaning that it's now cheaper to buy a home in Vegas than Reno. Inventory has fallen 19.8 percent over last year, and the housing stock is 30.43 percent younger than last year.

2. Santa Barbara, Calif. area

Santa Barbara is the only California town on the list, as most of the cities from the Golden State have already moved through a stage of accelerated recovery and have achieved a steadier pace of recovery. But Santa Barbara is still seeing big increases in home prices, to the tune of 27 percent. That takes the median list price in Santa Barbara from $549,000 to $697,777 -- the most expensive on this list.

Inventory dropped this year 15.9 percent and the age of inventory dropped 34 percent, meaning that homes stay on the market an average of just 41 days in the city, down from 62 and the smallest number of days on market in this list.

1. Detroit, Mich.

Detroit has long been struggling with an economic crisis. But the Motor City has actually turned around its housing markets. Instead of sinking when the city of Detroit had just filed for bankruptcy, its housing market quietly resurged, thanks largely to foreign and corporate investment.

"When you're sort of at the bottom, you can only really rise to the top," Piper said. "I think you're going to continue to see a lot of investors take the risk to get the greatest reward."

She also pointed to a proposal from Barclay's to loan the city $350 million. Even though the city council doesn't like the loan, it speaks to this idea that financial giants are still willing to invest in Detroit, she said.

Younger generations and some start-up companies are willing to set up in Detroit as well, taking advantage of cheap homes, cheap land and cheap rents.

Prices in Detroit are up a whopping 44.3 percent over last year and it trimmed its for-sale inventory and the age of its inventory, down 24.5 percent and 33.9 percent respectively, since last year. Prices are still low for a city of its size, with the median list price at $129,900, up from $90,000 last year.

Pending Home Sales Trend Upward

The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 0.3 percent in September 2012 to 99.5, up from 99.2 in August. Moreover, the September 2012 PHSI was 14.5 percent higher than the same period a year ago. Year-over-year, the PHSI has increased for 17 straight months.

The National Association of REALTORS® (NAR) reported monthly increases in the September PHSI for the Northeast, South and West, but a 5.8 percent decrease in the Midwest. This decrease is consistent with the 37.3 percent monthly decrease in new home sales in the Midwest reported yesterday. NAR reported strong year over year PHSI increases in the Northeast, Midwest and South, but only a small increase of 0.8% in the West.

If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what will likely happen to existing home sales when the contracts close in coming months. We anticipate that the October and November existing sales data will reflect today’s pending sales report, suggesting that existing home sales are likely to rise, but perhaps at a slower rate than in recent months.

Improved year-over-year existing home sales suggest a stronger demand for remodeling as well. Today’s PHSI release comes out on the same day that the NAHB Remodeling Market Index (RMI) reached 50, the highest level since the third quarter of 2005.

Additionally, there is some concern that some short sales are being accelerated into 2012 due to the looming expiration of the cancelled debt tax exclusion for principal residences. Unless Congress acts, at the end of the year, any mortgage debt forgiven as part of an existing home sale will become taxable income. This tax provision likely increased existing home sales in 2012.

Great Spaces: Jessica Simpson Sells in 90210

Great Spaces: Jessica Simpson Sells in 90210


Pop singer, wearer of Daisy Dukes and television personality Jessica Simpson is selling her California home for just under $8 million.

The recently renovated Hamptons-inspired home was built in 1991 and spans 5,500 square feet with five bedrooms and six bathrooms. The home also includes a media room, a commercial-grade kitchen, an office and library, a gym, a stone courtyard with a koi pond and a swimming pool.

Beyond her musical career, Simpson starred in films “Blonde Ambition,” “Major Movie Star,” and “The Dukes of Hazzard.”

Listed for: $7.995 million

Tattoo Star Sells Gothic-style Mansion

Tattoo artist and celebrity persona Katherine von Drachenberg (also known as Kat Von D) has listed her gothic-style pseudo castle in the Hollywood Hills for $2.5 million.

The gated compound was built in 1927 and includes gothic features such as a turret entry with an arched door, decorative wrought-iron stair rails, and a series of arches opening the second floor halls to the landing below.

With four bedrooms, 4.5 bathrooms and 4,148 square feet of living space, this home is sure to please anyone’s dark side. We’re unsure of where Kat is going, but we assume it’s somewhere with new husband—DJ and producer—Deadmau5, who proposed to the tattoo queen via Twitter. They wed on August 10 in an underwater-themed wedding, because, why not?

Listed for: $2.5 million

Central Banks Drop Tightening Talk as Easy Money Goes On

The era of easy money is shaping up to keep going into 2014.

The Bank of Canada’s dropping of language about the need for future interest-rate increases and today’s decisions by central banks in Norway, Sweden and the Philippines to leave their rates on hold unite them with counterparts in reinforcing rather than retracting loose monetary policy. The Federal Reserve delayed a pullback in asset purchases, while emerging markets from Hungary to Chile (CHOVCHOV) cut borrowing costs in the past two months.

“We are at the cusp of another round of global monetary easing,” said Joachim Fels, co-chief global economist at Morgan Stanley in London.

Policy makers are reacting to another cooling of global growth, led this time by weakening in developing nations while inflation and job growth remain stagnant in much of the industrial world. The risk is that continued stimulus will inflate asset bubbles central bankers will have to deal with later. Already, talk of unsustainable home-price increases is spreading from Germany to New Zealand, while the MSCI World Index of developed-world stock markets is near its highest level since 2007.

‘Go Wild’

“We are undoubtedly seeing these central bankers go wild,” said Richard Gilhooly, an interest-rate strategist at TD Securities Inc. in New York. They “are just pumping liquidity hand over fist and promising to keep rates down. It’s not normal.”

Normal or not, that’s been the environment now for five years after monetary authorities fought to protect the world economy from deflation and to hasten its recovery. In the advanced world, central banks drove interest rates close to zero and ballooned their balance sheets beyond $20 trillion through repeated rounds of bond purchases, a policy known as quantitative easing.

The economic payoff has been limited. The International Monetary Fund this month lopped its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, from July’s projected rates of 3.1 percent this year and 3.8 percent next year. It also sees inflation across rich countries already short of the 2 percent rate favored by most central banks.

Central bankers are on guard to keep low inflation from turning into deflation, a broad-based decline in prices that leads households to hold off purchases and companies to postpone investment and hiring.

‘False Start’

“There is a concern at central banks that what we’re seeing is another false start in their economies,” said Michala Marcussen, global head of economics at Societe Generale SA in London. “We now need to see two to three months of better numbers before they’re willing to contemplate an exit again.”

After flirting for months with the idea of curtailing stimulus, the Fed said in September it would continue purchasing $85 billion of bonds a month, citing the need to see more evidence that theU.S. economy will improve.

That came less than two weeks before a 16-day U.S. government shutdown that postponed releases of key data the Fed is relying on to guide its policy decisions. The Fed’s strategy also took a hit from this week’s news that employers added fewer workers to payrolls than projected in September.

The Fed will wait until March before slowing the pace of its third round of quantitative easing, according to the median estimate of economists in an Oct. 17-18 Bloomberg survey.

Same Place

‘If you look at where we are economically, versus where we were a year ago, we’re virtually in the exact same place,” Gary D. Cohn, president of Goldman Sachs Group Inc., said yesterday in a Bloomberg Television interview with Stephanie Ruhle. “So if quantitative easing made sense a year ago, it probably still makes sense today.”

That leaves central banks elsewhere likely to maintain a bias toward easing. Moving to tighten before the Fed is ready to do so would drive up currencies against the dollar, to the detriment of exports, said Derek Holt, vice president of economics at Bank of Nova Scotia in Toronto.

The Bank of Canada, citing “uncertain global and domestic economic conditions,” yesterday omitted language it used in previous decisions referring to the expected “gradual normalization” of its benchmark rate, now at 1 percent.

‘Low Level’

The Riksbank kept its rate at 1 percent today and said it sees it at 1.15 percent in the fourth quarter next year, versus 1.25 percent in September. “The repo rate needs to remain at this low level until economic activity is stronger and inflation rises,” it said. Norway left its benchmark rate at 1.5 percent today, a month after signaling it will move toward tighter policy as house prices and consumer debt hover at record levels.

The Philippines also held its rate at a record low 3.5 percent to support Southeast Asia’s fastest growing economy as inflation stays within the central bank’s targeted range.

“There’s an easy-money bias across global central banks that probably will persist until about March or April,” said Holt. “The Fed’s decisions complicated the exit strategies for a lot of central banks.”

If the Fed’s delay extends the decline in the dollar, then the Bank of Japan and the European Central Bank also are more likely to add fresh stimulus, Fels said in an Oct. 20 report. The ECB is likely to offer banks another round of cheap, long-term loans in the first quarter, while the BOJ may ease more to offset a 2014 consumption tax increase, Citigroup Inc. economists said in a report yesterday.

Emerging Markets

The dollar has declined 1.1 percent against a basket of 10 leading global currencies in the last month, according to the Bloomberg U.S. dollar index.

Some central banks in emerging markets are already acting. Chile unexpectedly lowered its benchmark rate by a quarter point to 4.75 percent on Oct. 17, pointing to weaker growth, inflation and the global outlook. Israel surprised analysts on Sept. 23 when it cut its key rate a quarter point to 1 percent, the lowest in almost four years.

“With the dollar much weaker in recent days and weeks, you’ll see central banks that were reluctant to ease start to do that now,” said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group Ltd. in New York. “They can be less worried about capital flight if the Fed isn’t tightening policy, and the strength in their currencies is probably imparting some disinflation into their economies, giving them a window to cut rates.”

Forward Guidance

Hungary, Latvia, Romania, Serbia, Sri Lanka, Egypt and Mexico have also eased since the start of September although Indonesia, Pakistan, Uganda and India tightened, with the latter softening the blow by relaxing liquidity curbs in the banking system at the same time. Chinese policy makers have also been draining cash from the financial system.

Even those central banks with limited room to act are using so-called forward guidance to deter investors from betting on an imminent increase in rates. The ECB vows to keep its main rate at 0.5 percent for an “extended period” and the Bank of England is pledging to maintain its benchmark at the same level at least until unemployment falls to 7 percent, which it doesn’t expect to happen for three years. The Bank of Japan is trying to expand its monetary base by 60 trillion to 70 trillion yen ($720 billion) to bring inflation up to 2 percent.

Fed Policy

The Fed also depends on forward guidance as a policy tool. Officials have repeated in every policy statement since December that their target interest rate will remain near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent.

“It’s hard to look around and see much changing on the rate front,” said David Hensley, director of global economic coordination at JPMorgan Chase & Co. in New York, who forecasts the average interest rate in developed economies to hold close to the current 0.40 percent for another year.

The cheap cash may come at a price that policy makers will have to pay later if it inflates asset bubbles. Germany’s Bundesbank said this week that apartments in the country’s largest cities may be overvalued by as much as 20 percent. In the U.K., BOE officials are rebutting suggestions of a housing bubble. Asking prices in London jumped 10.2 percent in October from the prior month, Rightmove Plc said Oct. 21.

BOE Governor Mark Carney today unveiled a revamp of the central bank’s money-market operations to widen access and cut the cost of liquidity insurance to the financial system. The BOE will expand the range of collateral it accepts in its facilities and offer money for longer periods on cheaper terms, Carney said in a speech in London.

Cool Demand

Swedish and Norwegian property markets are also proving a concern to their central bankers, and policy makers in New Zealand and Singapore have already sought to cool demand. Meantime, U.S. stocks are heading toward the best year in a decade with about $4 trillion added to U.S. share values this year.

“The bubble conditions are going to remain in place,” Michael Ingram, a market strategist at BGC Partners LP in London, told Bloomberg Radio’s Bob Moon yesterday. “We could well see further stimulus.”

For now, such concerns are being overridden by a need to enhance economic expansion. The U.S. unemployment rate, at 7.2 percent in September, is still only the lowest since November 2008 and joblessness is 12 percent in the 17-nation euro area.

“Whatever their official mandates, central bankers are supposed to safeguard a nation’s real income,” Karen Ward, senior global economist at HSBC Holdings Plc in London, said in an Oct. 21 report. Labor markets from the U.S. to U.K. suggest “we shouldn’t fear a rapid withdrawal of global liquidity any time soon.”

Half of Nation's Foreclosed Homes Still Occupied

NEW YORK (CNNMoney)

Foreclosure sounds like the end of the line, but actual eviction can take months or years -- even after the bank has repossessed a home.

RealtyTrac estimates that 47% of the nation's foreclosed homes are currently occupied. The percentage actually tops 60% in some hot housing markets, like Miami and Los Angeles.

Those still living in repossessed homes include both former owners and renters. Either way, their time in the homes is mortgage and rent free.

To arrive at its estimate, RealtyTrac compared its database of foreclosed homes with postal records showing whether mail was still being collected and whether change-of-address forms had been filed.

Even when occupants leave voluntarily, old owners typically take about two months to vacate.

With renters, it can take a year or more. "If someone has a bona fide rental agreement, we have to abide by that," said Amy Bonitatibus, a spokeswoman for JP Morgan Chase.

Related: California city's drastic foreclosure remedy

One issue, according to Wells Fargo spokesman Tom Goyda, is that the eviction process can take months as it winds through the legal process. The timing varies widely based on local laws and the backlog of cases in individual courts.

Goyda said the bank has been trying to speed up the process by offering cash to prompt occupants to leave.

In addition, some states, like Alabama and Utah, have so-called redemption periods of up to a year during which former owners can get their home back if they can find the means to pay off their mortgages.

Related: Surprising foreclosure hotspots

And banks may be in no rush to kick people out. They will take their time in markets with a lot of homes for sale and depressed prices. Plus, letting homeowners stick around can help protect homes from abuse.

"Although one thinks lenders take losses by not moving evictions forward, they're still faring better by keeping the properties occupied," said Pauliana Lara of the Consumer Action Law Group in Los Angeles, which works with homeowners to fight foreclosures. "Many foreclosed homes get vandalized or squatters move in." 

Find homes for sale

First Published: October 24, 2013: 4:03 AM ET

Families Blocked by Investors From Buying U.S. Homes

Home purchases by institutional buyers reached a record high in September and all-cash buyers accounted for almost half of sales as investors responded to rising demand from renters.  Institutional purchases accounted for 14 percent of sales, according to a report today from RealtyTrac. That was the highest share since the real estate data firm began in 2011 to track transactions by that group, which it defines as buyers of 10 or more homes a year. All-cash sales rose to 49 percent from 40 percent in August and 30 percent a year earlier, a sign that rising mortgage rates since May have kept some people out of the market and that smaller investors are stepping up purchases.  

“Both investors and traditional buyers are trying to snap up cheap homes before prices go higher, but the investors have the advantage of paying cash and not having to go through a convoluted mortgage process,” said Michael Hanson, a former Federal Reserve economist now working for Bank of America Corp. in New York. “People are being bid out of some markets because of investor demand.”

Wall Street’s influence on the residential real estate market is growing as the biggest investors, Blackstone Group LP and American Homes 4 Rent, have together bought about 60,000 homes across the country to benefit from low prices and rental demand from millions of former home owners who have lost properties through foreclosures.

The homeownership rate declined to 65 percent in the first half of this year from a peak of 69.2 percent in June 2004. The level is expected to stabilize at about 63 percent, adding more than 2 million households to the rental population, according to Morgan Stanley analyst Haendel St. Juste.

Pendulum Swings

Families are still able to live in single-family homes with a yard for their kids to play in, said Daren Blomquist, a RealtyTrac vice president. However, they’re sending their money to investor-landlords, rather than paying off a mortgage.

“The pendulum is swinging too far from the direction we saw during the run-up to the mortgage crisis,” Blomquist said in an interview. “Then, we tried to make everyone an owner. Now, we have people who have the income to pay a mortgage and have the desire to own a home who are stuck being renters.”

Blackstone has led hedge funds, private-equity firms and real estate investment trusts raising about $20 billion to purchase as many as 200,000 homes to rent after home prices plunged 35 percent from the 2006 peak.

Mortgage Rates

The ability of investors and cash buyers to outbid traditional home purchasers has grown after a spike in mortgages rates that began in May. The average fixed rate for a 30-year home loan jumped almost a percentage point to a two-year high of 4.58 percent in mid-October, according to data from Freddie Mac.

The average rate for a 30-year fixed mortgage dropped to 4.13 percent this week. It’s risen from 3.35 percent in May.

“There’s a tremendous pressure on inventory in the areas that are being dominated by investors,” said Keith Gumbinger, vice president of HSH.com, a Riverdale, New Jersey-based mortgage website. “People end up wanting to buy a home, but they can’t. All the homes have been converted into rentals.”

Daryl Dennis spends his days helping investors do that. A general contractor for Waypoint Homes, an Oakland, California-based real estate fund that buys more than 50 homes a month in the metro Atlanta market, Dennis oversees plumbers, painters and landscapers on about 20 single-family projects a month.

“The investors are ruling the market,” said Dennis, interviewed by phone while on the job at a project in Canton, Georgia, outside Atlanta. “The little guy can’t win if he’s up against a deep-pocket investor.”

Biggest Chance

The biggest chance for profit comes from buying bank-owned properties that often are sold in bulk, Dennis said. About 10 percent of September sales nationwide were properties that had been repossessed in foreclosures, according to the RealtyTrac report.

Las Vegas had the highest share of those sales, at 21 percent. In the California cities of Riverside and San Bernardino the share was 20 percent of the market, in Cleveland it was 19 percent and in Phoenix it was 18 percent, according to the report.

Atlanta was the top market for institutional investors, who accounted for 29 percent of all home purchases there in September, according to the RealtyTrac report. Las Vegas was second at 27 percent, followed by St. Louis at 25 percent, Jacksonville, Florida, at 23 percent, and Charlotte, North Carolina at 17 percent.

Flipping Houses

Adam Luesse is an investor in St. Louis who paid cash for five houses he turned into rentals. He also buys properties to renovate and resell at a profit, called flipping. He planned to list his latest flip, a two-bedroom home on the west side of the city, for sale today for $140,000.

“When financing became difficult, that pushed the entire lower tier of buyers into rentals,” Luesse said. “They either don’t have the down payment or they don’t have the credit score.”

Nationally, the median monthly rent was at an all-time high of $735 in the second quarter, according to U.S. government data. The rental vacancy rate, which measures the number of empty units, fell to 8.2 percent, the lowest since the first quarter of 2001.

The median price of a distressed residential property, meaning a property in foreclosure or a home already seized by a bank, was $112,000 in September, a discount of 41 percent from the $189,000 median price of a non-distressed property, according to the RealtyTrac report.

Foreclosed Properties

About 49 percent of homes were bought with cash, up from 40 percent in August and 30 percent a year earlier, the report said.

Investor demand for foreclosed homes has driven up prices at a pace not seen since the boom that ended in mid-2006. The S&P/Case-Shiller index of property values in 20 cities increased 12.4 percent in July from a year earlier, the biggest advance since February 2006.

While real estate values nationally are still 21 percent below their peak, investors’ mass purchases are helping push up values in cities hardest hit by the property crash, with a 27.5 percent surge in Las Vegas and gains of 18.5 percent in Atlanta in July from a year earlier.

“The housing market is tilting in favor of deep-pocket institutional investors, especially in cities that were hard-hit with foreclosures,” said RealtyTrac’s Blomquist “These guys will pay as much as they need to get a property and that’s squeezing out families looking for a home to live in.”

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.