- According to com, some 36% of all sales are all cash sales
- All cash sales increased on high-end of market due to uptick in equity markets
Home price growth goes hand-in-hand with home equity growth. The result? Cash sales increase on the high end of the market as there’s “…more cash to go around among high-end buyers thanks to the performance of equity markets…” said Danielle Hale, chief economist with realtor.com.
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According to Hale, all-cash sales now represent some 36% of the total sales market. The top hottest all-cash markets were in the northeast and western markets and up +3.4% and +2.4% respectively, according to realtor.com, include:
- Nassau County NY – 49% all-cash sales of all sales
- West Palm Beach FL – 40%
- Lauderdale FL – 33%
- Miami FL – 31%
- Atlanta GA – 29%
- Tucson AZ – 28%
The lowest cash markets included:
- Washington DC – 18% all-cash sales of all sales
- Denver CO – 15%
- San Diego CA – 15%
- Oakland CA – 13%
The annual percentage point change in all-cash home sales looked like this:
- $0-$100K – +6% – (this is the lowest price tier and represents approximately 65% of the market)
- $100K-$200K – +3% – this is the low-mid price tier and represents some 36% of the market)
- $750K-$1M – -1%
- $1M+ – +2.5% – (in this highest price tier, this +2.5% of all sales translates into 47% of all sales being all-cash deals
Obviously, sellers prefer all-cash deals, as do investors but usually investors favor all-cash deals on the low-end of the market. The +2.5% uptick in annual percentage points in the high-end of the market may be due to this incredibly competitive market.
Hale said that this percentage point change in the various market tiers may likely be “…a reflection of who’s buying. While investors (who are more likely to use cash) are active in the market, non-corporate buyers, likely owner-occupants are a bigger chunk of buyers in this period, and that affects the overall cash share.”
Because high-end buyers have more financial resources available to execute all-cash sales, everyone else may ask their family and/or friends to help them by loaning them the money in order to “win” the house with an all-cash deal. Once the transaction is then closed, the actual buyers may take out a mortgage on the house to then pay back their family and/or friends.
New companies such as Ribbon, Accept.inc and Reali are now leveraging the competition in the market by helping more moderate-tier buyers make all-cash offers.
Thanks to realtor.com, Redfin and CNBC.
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