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43% of 1Q 2014 home buyers paid cash
05-08-2014, 06:50 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,022
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43% of 1Q 2014 home buyers paid cash
I was surprised by this statistic. Far more all-cash home purchases going on than I would have thought:
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All-cash purchases accounted for almost 43% of all sales of residential property in the first quarter of 2014, up from almost 38% in the previous quarter and 19% in the first quarter of 2013...
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Quote:
So who does have the money to buy a home outright? Wealthy Americans and downsizing empty nesters make some of these all-cash deals, he says. Investors who are eager to make a profit by buying low and renting those properties — or flipping them — also drive up the number of all-cash deals...
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No surprises on the top all cash markets:
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The top five markets for cash sales were in Florida, which experienced one of the biggest property crashes after the 2008 recession: Cape Coral-Fort Myers (74%), Miami (67%), Sarasota (65%), Palm Bay (64%), and Lakeland (62%). Other major metro areas where over half of all property sales were done in cash included New York (57%), Columbia, S.C., (56%), Memphis, Tenn. (55%), Detroit, Mich. (53%), Atlanta (53%) and Las Vegas (52%).
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43% of 2014 home buyers paid all cash - MarketWatch
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05-08-2014, 07:58 AM
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#2
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Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,731
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Yep,,we bought our investment house in 2011 and our downsized "retirement" house in 2013 with cash.
One thing a cash purchase does is it makes the closing with the escrow company go very quickly. The other thing it does is carve out the aggravation of having to deal with a lender.
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05-08-2014, 08:28 AM
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#3
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Recycles dryer sheets
Join Date: Mar 2014
Posts: 164
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Quote:
Originally Posted by aja8888
One thing a cash purchase does is it makes the closing with the escrow company go very quickly. The other thing it does is carve out the aggravation of having to deal with a lender.
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Yes, getting rid of those two headaches is very nice.
Interesting statistics. I'm surprised that the percentage was that high.
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05-08-2014, 08:53 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,545
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Paid cash for a house last week so guess I'll be in the second quarter numbers. Will pay cash for the remodel as well. That should be it for me...other than selling the other two houses we own.
No more mortgages!
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05-08-2014, 10:17 AM
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#5
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Recycles dryer sheets
Join Date: Jul 2013
Location: Mars
Posts: 137
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Wow....43% really surprises me. I would expect to see results like that from this forum especially those in downsizing mode but not for the rest of the population. According to the link below the average American family has $3800 in savings and $35000 saved for retirement. I guess the average American family wasn't purchasing a house during Q1 as they surely would not have been paying cash (IMO).
http://www.statisticbrain.com/americ...al-statistics/
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05-08-2014, 10:57 AM
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#6
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Full time employment: Posting here.
Join Date: Dec 2013
Location: San Diego
Posts: 880
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The cash percentage may be skewed a little by people taking out 1st or 2nd mortgages on an existing property that they own outright or mostly paid up. I know two people who did that, one took out a mortgage on their home to buy a rental property cash. It was faster and cheaper for them to do it that way and they got a better price on the property they were buying.
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05-08-2014, 11:54 AM
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#7
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,212
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I know the details of two real estate transactions that closed in the past few weeks - both all cash.
The first was someone relocating back to San Diego to care of an aging parent. The buyer was limited in price because she was over 55 and wanted to transfer her prop 13 tax rate from her previous house - which you can do if you're "downsizing" - she sold her previous house - and couldn't spend a penny extra. She paid all the closing costs of the seller to get it at the price that qualified. (She was offering under market.) Doing it all cash allowed her have an easy close and let the seller feel comfortable with the transaction.
The other was an estate sale - investors paid 999,999 for a tear down in a coastal community. Paying cash got it past the probate court easier than if the transaction had gone through financing.
Both deals closed in less than two weeks from accepted offer.
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05-08-2014, 01:08 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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A Chinese-American friend of mine asserts that rich people in China are buying up real estate in US, always with cash (illegally moved out of China). Some of them don't even check out their new RE in person andy buy by checking things on-line.
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05-08-2014, 01:13 PM
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#9
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Full time employment: Posting here.
Join Date: Dec 2009
Posts: 526
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We are looking to buy for cash. Even so far as to be making renovations paying cash
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05-08-2014, 01:35 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Many cash buyers are not looking or a home, they are seeking rentals. And a good number of these in coastal communities anyway are foreign, trying to get some of their money offshore.
Ha
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05-08-2014, 01:45 PM
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#11
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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I was surprised at how many cash offers there were in an expensive market like San Francisco. I just don't feel like freeing up $1M in capital just to compete for a 1-bedroom condo. We are pretty much priced out at this point.
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05-08-2014, 01:50 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Mar 2005
Posts: 2,603
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Last flip I did was cash buy and cash sell .... did carry paper on 1/3 of the price. But no banks involved. Had 3 full price offers fail to get approved by the stingy banks. The bankers don't realize the problems they create!
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05-08-2014, 02:13 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by tryan
Last flip I did was cash buy and cash sell .... did carry paper on 1/3 of the price. But no banks involved. Had 3 full price offers fail to get approved by the stingy banks. The bankers don't realize the problems they create!
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I would say that they see these as someone else's problems, and don't care. Very hard to imagine that a banker who is still breathing would not realize something this fundamental.
Ha
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05-08-2014, 02:20 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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Quote:
Originally Posted by FIREd
I was surprised at how many cash offers there were in an expensive market like San Francisco.
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Likely, money from China ...
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05-08-2014, 02:35 PM
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#15
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Full time employment: Posting here.
Join Date: Dec 2009
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Quote:
Originally Posted by robnplunder
Likely, money from China ...
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Makes sense. We buy their t-shirts and they buy our debt and realestate. Very wise.
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05-08-2014, 02:39 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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Quote:
Originally Posted by zedd
Makes sense. We buy their t-shirts and they buy our debt and realestate. Very wise.
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Yeah, I am not going to worry about US-China trade deficit as long as $ is flowing into US. However, it does create house bubble and we all know how the last one ended.
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05-08-2014, 02:42 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
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Hedge funds have been big buyers as well.
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05-08-2014, 03:32 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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We wound up selling our last house to an investor group for cash a month ago. It was a lower offer than we might have had otherwise, but we had one offer fall through because of a survey discrepancy and anyone who needed financing would require us to tear down or massively redesign the garage at our (considerable) expense. And we closed in about 10 days. Who knows how much longer it would have taken to get another "market" offer, and then deal with financing, demands to repair stuff and help with closing costs, not to mention about $400 a month in lost cash flow to taxes, insurance and utilities while it stayed on the market.
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05-09-2014, 08:33 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Mar 2005
Posts: 2,603
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Quote:
Very hard to imagine that a banker who is still breathing would not realize something this fundamental.
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Agree .... to make matters worse ... all three rejected buyers were first time home buyers. Not a good sign ... the banks can't get out of thier own way.
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FIRE'd since 2005
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05-09-2014, 08:47 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,413
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It's not the banks as much as it is Freddie and Fannie, the buyers of 90 percent of mortgages today. If the bank doesn't follow their rules, the bank gets the loan back.
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