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59 » VISIT US ONLINE @ DSNEWS.COM CASH SALES SHARE REMAINS ELEVATED DESPITE PERSISTENT DECLINES e share of residential home sales that are all-cash transactions has been on the steady decline for nearly five years. At their peak, all- cash sales accounted for nearly half of all home sales; now that percentage is down below one- third, according to data released by CoreLogic. Despite the persistent declines, the cash sales share remains elevated above pre- crisis levels more than seven years later. In September 2015, the cash sales share declined by another 3.4 percentage points year-over- year down to 32.5 percent, meaning all-cash transactions accounted for less than one-third of all residential home sales. At their peak in January 2011, all-cash transactions accounted for close to half of all homes sales at 46.6 percent. CoreLogic estimates that if the cash sales share continues to decline at the rate it did in September, it will reach pre-crisis levels by the middle of 2017. About 58.3 percent of cash sales were REO properties in September, making it the category with the largest cash sales share. Even though the percentage of cash transactions that were REO remained high, REO properties accounted for a small percentage of cash transactions overall at 6.4 percent as sales of REO properties continued to decline. At their peak in January 2011, REO sales accounted for nearly one-quarter of all home sales at 23. 9 percent. "e cash share was 32 percent in September, far below the 47 percent peak in January 2011 but still above the long- term average of about 25 percent in more normal market conditions," CoreLogic Chief Economist Frank Nothaft said. "Two factors that have moved the cash share lower are the drop in REO sales—often purchased by investors for cash—and the strong U.S. dollar, which has discouraged foreign buyers." e cash sales share remained near one-half in a handful of states in September. Alabama had the highest cash sales share for September with 48.2 percent, followed by West Virginia (46 percent), Florida (45.2 percent), New York (44.1 percent), and Kentucky (39.6 percent). e cash sales share was higher than 47 percent in five metro areas during September, four of which were located in Florida: Miami- Miami Beach-Kendall (50.8 percent), West Palm Beach-Boca Raton-Delray Beach (50.6 percent), Philadelphia, Pennsylvania (48.9 percent), Fort Lauderdale-Pompano Beach- Deerfield Beach (47.9 percent), and North Port- Sarasota-Bradenton (47.2 percent). Syracuse, New York (14.1 percent) had the lowest cash sales share in September. FED SEEKS COMMENT ON CAPITAL BUFFER FOR INTERNATIONALLY ACTIVE BANKS e Federal Reserve Board announced on Monday that it is seeking public comment on a policy statement proposal that lays out the framework the Central Bank would follow in setting the capital requirements for internationally active banks known as the Countercyclical Buffer, or CCyB. e CCyB is a macroprudential tool designed to help banks absorb shocks that result from declining credit conditions, according to the Fed. e buffer would raise capital requirements for banks that do business internationally in times of elevated risk of above-normal losses, thus increasing the resilience of the financial system. According to the Fed, the proposed policy statement provides background information on the factors the Fed evaluates as it determines settings for the CCyB. ese may include but are not limited to leverage in both the financial and nonfinancial sectors; maturity and liquidity transformation in the financial sector; and asset valuation pressures, the Central Bank said. "e Board also would monitor many financial and economic indicators and consider using different models to evaluate risks to financial stability," the Fed stated in its announcement. "For example, the Board could consider indicators of the risk-taking, performance, and the financial condition of large banks, and combinations of the private nonfinancial credit-to-GDP (Gross Domestic Product) ratio with price trends in residential and commercial real estate." e range of indicators the Fed would consider when setting the CCyB would change over time due to constantly evolving economic and financial risks. e buffer would apply to banks that are subject to advanced approaches capital rules, which are typically banks with more than $250 million in assets or $10 billion in on-balance-sheet foreign exposures. e CCyB would also apply to any depository that is a subsidiary of a bank that is subject to the CCyB. According to the Fed, the CCyB is calculated based on private-sector credit exposures in the U.S. and it would range from 0 percent or risk-weighted assets in times of moderate financial system vulnerabilities to up to 2.5 percent during times of significantly elevated vulnerabilities, once it is full phased in. Should banks not meet the buffer, they would be subject to restrictions on capital distributions and payment of discretionary bonuses, according to the Fed. At the same time the Fed released the framework for comment, the Fed voted to affirm the current CCyB level at 0 percent. Banks would have 12 months before the increase became effective should the Fed decide to modify the CCyB level, unless the Fed establishes an earlier effective date, according to the Fed's announcement.

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