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Posted by on Dec 27, 2011 in Down Payments, Market Conditions | 10 comments | Print Print

Cash Homebuyers Increased

From NMN:

Nearly four out of every ten homes sold in 2011 have been purchased for cash on the barrelhead, according to a preliminary count by Housing Intelligence.

Despite record low mortgage rates for most of the year, 38% of all homes sold will be all greenbacks, no mortgage involved, HI reports. That’s up from 34% in 2010 and double the rate of all-cash deals recorded in 2006.

And the trend is likely to continue, at least in the near term, the research wing of the Hanley-Wood publishing company suggests, as long as investors continue to take down a big share of the properties for sale, especially in which the previous owner was in some sort of duress.

For the record, 20% of all housing sales in 2007 were for cash. In 2008, the figure jumped to 26%. And in 2009, it moved up again to 31%.

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How did we do around San Diego County in 2011?

Price Range Cash Purchases Total Sales %%
$0-500,000
7,402
25,271
29.3%
$501-$1.0M
882
5,181
17.0%
$1.0 million+
500
1,460
34.2%
Total
8,784
31,912
27.5%

I haven’t come across one buyer yet who had to pay cash because they couldn’t qualify for a loan. 

10 Comments

  1. “I haven’t come across one buyer yet who had to pay cash because they couldn’t qualify for a loan.”

    Trying your luck as a comedian now ?

  2. See what I get for being a nice guy and let you back in for a week?

    You’re blocked for good now.

  3. Kind of an interesting breakdown and it probably shows that in the $500K-$1million space you’re competing against other owner occupiers while in the low end you’re competing against investors and in the high end you’re competing against the serious wealth.

  4. Don’t mistake “cash” for cash.

    One’s account at Merrill will offer a 2% line…so why take out a mortage….just write a check from the ML account.

  5. We almost had to fund with cash because the loan wasn’t funding on time. Short sales suck!

  6. I had to pay cash because I could not get a loan. I wash self employed but not working now.

  7. I’m sure there are a few, and there is one.

    It is gutsy to buy a house without a job, because the cost of homeownership doesn’t slow down, typically. Congratulations Mike.

  8. From CR:

    http://www.calculatedriskblog.com/2011/12/lawler-completed-foreclosure-sales-in.html

    From economist Tom Lawler:

    While data on the number of loans either seriously delinquent or in the foreclosure process suggested that an increase in the number of residential properties lost to foreclosure this year was a “slam dunk,” incoming data suggest that in fact the numbers will be down significantly from 2010, and will in fact probably come in at the lowest level since 2007!

  9. I was beat by a all-cash offer even though I bid $20,000 more than the final selling price.

  10. Any investor with more than four Fannie/Freddie loans is paying cash. A lot of asset managers prefer cash because the deal is more likely to close and will take lower cash offers. In some markets, foreign money is pouring in – e.g. Canadians in Phoenix and Chinese buyers in California. A lot of these folks are all cash buyers.

    Given currency exchange rates and yields on conpeting investments, real estate looks darn good. Leverage can enhance your yield, but if you can’t get a loan or you are risk-averse, why not just pay cash?

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