Another sign the housing market isn't a paper tiger, existing homeowners are grabbing a larger share of purchases as fewer investors prowl the market.
A sustainable housing market typically includes a more balanced share of first-timers, move-up buyers and investors, and that's how the housing recovery is beginning to shake out.
Homeowners taking the lead
Current homeowners, cashing in on growing home values and the equity that allows them to move on, accounted fro 44.6 percent share of home sales in June, up from 43.8 percent in May, according to the July 22 Campbell/Inside Mortgage Finance HousingPulse.
Homeowners have confidence that home price gains are likely to continue, perhaps at a slower pace, but are also concerned rising mortgage rates could cut into their home equity gains and housing affordability.
To avoid higher rates that could also price them out of the market, but also to bank on their confidence in the recovery, homeowners are wisely moving their real estate investment into a move-up home, a more affordable move-down residence or a move-over property in a better neighborhood.
First-time home buyers losing ground
First-time homebuyers, on the other hand, already getting slammed by higher interest rates, experienced a drop in market share, from 36 percent in May to 35.7 percent in June, according to HousingPulse.
First-timers weren't blind to rising housing costs, but too many of them sat on the fence, glued in place by two years of near record low interest rates.
When rates began rising, after home prices shot up, Goo Gone didn't work fast enough to free them from their perches before they were priced out of the market.
That's unfortunate, because some potential first-timers also feared the multiple-offer market of investors, but now investors are leaving the market as fast as they arrived.
They knew a good deal when they saw one – when the housing recovery was getting underway.
Investor exodus
In June, the investor share of home purchase transactions fell to 19.7 percent, down from a 23.1 percent share found as recently as February and the lowest level recorded since September of 2012.
The HousingPulse investor traffic index was down for the fourth month in a row in June.
Buy low-reap rental income-sell high investors are making less money now that home prices are rising.
Flipping - buying to fix up and sell quickly - is also less profitable because the expense buying, carrying the property and fixing it up could be more than the sales price.
Cheaper distressed homes are also disappearing. The share of distressed property sales - foreclosures and short sales - plunged from more than 40 percent a year ago to about 28 percent in June, the lowest distressed property share recorded in more than least three, Housing Pulse reported.
