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Fri January 24, 2014
An Astonishing Share Of Homebuyers Are Paying All Cash
Originally published on Fri January 24, 2014 10:54 am
More and more people are buying homes with pure cash. In December, all-cash purchases accounted for 42.1 percent of all U.S. residential sales, according to the latest report from RealtyTrac, a company that collects and analyzes housing data.
There are a few things driving this. Last summer, interest rates on mortgages jumped sharply. And though rates are still low by historic standards, relatively higher rates make borrowing money a less appealing option.
If you do want a mortgage, you might not be able to get one: Lending standards remain unusually tight, keeping lots of potential buyers out of the market.
Also, big, institutional investors have started buying up lots of homes and renting them out. They accounted for about 20 percent of the all-cash sales in December (and about 8 percent of home sales overall).
The high share of buyers paying with all cash is a "red flag" for the housing market, Daren Blomquist, vice president of RealtyTrac, told me. "It's like we put the fate of the housing market in the hands of the wealthy few," Blomquist said. "Hopefully we can see the number of cash buyers go down. That's what we need to see for long-term recovery."