Cash buyers make up nearly a third of U.S. home purchases

Cash buyers make up nearly a third of U.S. home purchases

Nearly a third of all US homes are bought with cash – and while this trend has declined slightly since the start of this year, it’s still up from before the COVID-19 pandemic. does not send the housing market into a frenzy.

That’s according to a Redfin report released on Friday, which found that 31.4% of US home purchases were paid for in cash in July. That’s still pretty close to an eight-year high reached earlier this year, in February, at just over 32%, and up from 27.5% a year earlier.

“The share of all-cash purchases surged in early 2021 during the pandemic-driven home buying frenzy and has remained elevated since then,” the report said.

Redfin analyzed county records in 41 of the most populous metropolitan areas in the United States, dating back to 2011, with July being the most recent month with data available.

Why are there so many cash buyers?

Mortgage rates jumped above 6% this week for the first time since 2008. This is not the ideal time to seek financing for the purchase of a home. Any buyer would therefore probably prefer to pay cash if they are able.

However, cash buyers also flooded the market (and everyone else) at rising rates during the pandemic housing frenzy, when mortgage rates were below 3%.

But it was also a time when competition in home buying was at an all time high. Buyers faced bidding wars and struggled to stand out among sometimes dozens of other offers. Cash offers were another way for shoppers to stand out.

It also goes back to a key part of why the housing market has burned so hot during the pandemic. The sudden shift to remote working has allowed Americans to reevaluate their lives, sell and use cash to buy homes in new areas.

“This has allowed a record share of buyers to move,” notes Redfin, “often from expensive to affordable parts of the country. Home values ​​in the United States have skyrocketed since the start of the pandemic, which which means Americans selling a home in an expensive place like San Francisco can use equity to pay cash in a more affordable area like Las Vegas.

Investors are also contributing to the rise in cash buyers. Of the U.S. homes sold in the first quarter of 2022, 28% were purchased by investors, according to a recent report from Harvard University’s Joint Center for Housing Studies. The report also found that investors had snapped up a “record share” of single-family homes – with a spike in investor purchases that began shortly after COVID-19 hit the United States.

Yet investors continue to buy more homes than before the pandemic. In the second quarter of this year, they bought 87,500 homes in the United States, up 5.9% year-over-year, according to an August Redfin report.

Where are the most common cash buyers?

Think about the type of people who are most likely to buy a house with money: the ultra-rich. Now think about where they are most likely to live.

New York.

Long Island, New York — home of the Hamptons — is in Nassau County, the metro with the highest share of all cash shoppers in July: 66.5%, according to Redfin.

The other two top-ranked cities are both in Florida: West Palm Beach (56.4%) and Jacksonville (45.5%).

Here is a ranking of the 10 richest real estate markets in cash buyers from Redfin.

  1. Nassau County, New York State — 66.5%
  2. West Palm Beach, Florida — 56.4%
  3. Jacksonville, Florida — 45.5%
  4. Milwaukee, Wis. — 45.3%
  5. Fort Lauderdale, Florida — 43.3%
  6. Orlando Florida — 42.5%
  7. Atlanta, Georgia — 42.4%
  8. Cleveland, Ohio — 42.1%
  9. Charlotte, North Carolina — 42.1%
  10. Tampa, Florida — 41.3%

Where are cash buyers least common?

Now look west. According to Redfin’s report, three expensive markets in California and Washington rank with the lowest share of cash shoppers, “partly because high prices make it harder to pay cash.”

Here is a ranking of the metros with the smallest share of cash buyers in July.

  1. Oakland, California — 15.1%
  2. San Jose, California — 16%
  3. Seattle, Washington— 16.7%
  4. washington d.c. — 17.5%
  5. Pittsburgh, Pennsylvania — 17.8%
  6. Virginia Beach, Virginia — 18%
  7. Los Angeles, California — 19.6%
  8. Newark, New Jersey — 19.9%
  9. San Diego, California — 20.1%
  10. Portland, OR — 20.4%

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