A large share of home purchases this year are paid for in cash. That’s a big jump from last year and the largest since 2014, according to Redfin. This share is largely driven by buyers of both primary and secondary homes who have money to spare as they take advantage of a surging stock market and record-breaking housing equity.
The percent of cash sales varies widely by location, but it generally rises in more expensive markets and declines in cheaper ones. It also varies by the types of buyers in a given market, from those supported by familial wealth to first-time homebuyers who may not have access to credit and would rather pay cash for their homes.
In a recent year-end HomeLight study, nearly half of real estate agents reported their clients tapping into money from other family members or liquidating recent stock gains to pay for a home. Some agents even said that some of their iBuyers, instant buyers who can buy homes at close to their list price and are not obligated to get financing, pay in cash for their homes.
For many, paying cash means more flexibility in a market with high home prices and tight housing supply. These buyers may be able to negotiate higher offers or find other ways to close on their purchase, such as transferring money from an investment account or selling other assets. Click here https://www.kingfisherre.com/sell-my-house-fast-virginia/
Another reason for the emergence of cash sales is rising mortgage interest rates, which make it easier for people to borrow money to purchase a home. This allows them to leverage the savings they’ve accrued, which can help them buy a more expensive home than they could have otherwise afforded.
Lastly, people who can’t obtain a mortgage because they have bad credit or no income are also likely to pay for their home in cash. These buyers are a growing part of the market but they remain a small share of all sales.
Top Homebuying Cash Markets
The biggest cash-heavy markets include the West Palm Beach area in Florida, which has a 52.6% share of cash-purchased homes as of October, followed by Naples, Florida (52.5%). Nassau County, New York, on Long Island has a 50.2% share; North Port, Florida, is at 49.4%; Greenville, South Carolina, has a 45.4% share; and Jacksonville, Florida, has a 40.1% share of cash-purchased homes.
Other cash-heavy markets include Phoenix, Arizona; Denver, Colorado; Tucson, Arizona; Atlanta; Houston, Texas; and San Antonio, Texas. These markets are popular among people who move to more affordable parts of the country for work, retirement or vacation and often purchase homes with all cash.
Some other cash-heavy markets are those with strong economies and low unemployment rates, such as the Sun Belt, where cash purchases have grown significantly in the past year. These areas are popular among investors who want to build a portfolio of investments, and they have a strong base of second-home buyers.