Home sales in the United States increasingly go to cash buyers
Single family home in Buffalo or Detroit
More and more buyers and investors come to the negotiating table and make deals with cash in hand.
One-third of all single-family homes and condominiums sold in the United States in the second quarter were purchased for cash, up from 20.6% a year earlier. This is the highest percentage since the first quarter of 2015, according to LA Biz.
In a number of states and cities, cash made up the majority of sales. In Georgia, 62.1% of homes sold were bought for cash, an increase of 147% from 2020. In Michigan, 58.4% did so and 52.5% in New York.
Some individual metropolitan areas recorded even higher percentages. The highest were Buffalo and Detroit, where 71 percent and 68.1 percent of sales were in cash, respectively.
Both of these towns suffered huge population declines when the Rust Belt lost manufacturing jobs in the late 20th century, and some houses fell into disrepair and lost most of their value. Bargain-hunting house pinball machines and single-family rental investors with cash in hand may now be crowding out traditional homebuyers in these markets.
Cities and states with growing shares of cash buyers have tended to see a decline in the number of deals made with Federal Housing Administration loans. FHA loans are popular with first-time home buyers because they offer low down payments, but generally require an insurance fee to offset the risk of default.
Since the pandemic, investors have invested money in single-family rental space, first anticipating widespread foreclosures – which spawned the single-family rental business during the last financial crisis – and now marketing to retailers. high price families by record home valuations.
[L.A. Biz] – Dennis Lynch