Cash-Only Buyers Reach a Decade High
The National Association of Realtors® states that in January, 32% of house sales were to cash buyers, the highest percentage since 2014. A lot of them used the equity from a previous house sale, according to a recent article by Melissa Tracey of Florida Realtors.
Over the past six months, the majority of all-cash buyers have been vacation home buyers and real estate investors, according to NAR. But more buyers buying a primary house in the previous two years are also doing so with cash, says NAR Deputy Chief Economist Jessica Lautz on the association’s Economists’ Outlook blog.
In the words of Lautz, these housing consumers were able to buy their next property without a mortgage after they had previously owned one and sold it. “The significant amount of housing equity they have earned as home prices have increased in recent years is probably what gave them the freedom to make this purchase.”
Based on NAR data, only 6% of first-time home purchasers paid cash in 2023, but 26% of repeat buyers—who probably had equity from a previous sale—made the same purchase. “All-cash buyers are likely to remain prevalent in the market as homeowners earn more housing equity as home prices are expected to increase throughout 2024 due to limited housing inventory and high demand to purchase homes,” adds Lautz.
Even with low housing supply in many markets, there is still a lot of rivalry for prospective homeowners. However, cash purchasers frequently hold the advantage. A cash offer could instill greater trust in home sellers. The average house received 2.7 offers in January. “These all-cash buyers will probably win bidding wars if multiple offers continue,” Lautz predicts. “The financing party might not have the best deal on the house.”
The top ten locations for buyers of cash
The end-of-January 2023 Year-End Home Sales data from ATTOM Data Solution suggests that some U.S. regions seem to have a higher concentration of cash home purchases than others.
In 2023, at least half or more of all home transactions in the ten metro regions listed below were made in cash. The report says that researchers have shown that a greater number of cash buyers frequently translates into more investors, a more competitive buyer market, and potentially stricter lending conditions. In 2023, the ten metro areas with the greatest percentage of cash purchasers were:
- Macon, Ga.: 61.5% of homes bought with cash in 2023
- Naples, Fla.: 58.9%
- Myrtle Beach, S.C.: 56.3%
- Youngstown, Ohio: 55.1%
- Salisbury, Md.: 54.4%
- Lake Havasu City-Kingman, Ariz.: 52.9%
- Syracuse, N.Y.: 52.8%
- Cape Coral-Fort Myers, Fla.: 52.2%
- Gainesville, Ga.: 52.2%
- Prescott, Ariz.: 51.5%
This article originally appeared on Florida Realtors
