Transactions consisting of only cash have now hit their lowest share since 2009. In June 2015, all cash sales accounted for 22% of all existing home sale transactions. In June of 2014, all cash sales were at 32 percent. Existing home sales continue to rise so many buyers have turned to financing their home because their overall confidence in the housing market has improved.
In March, all cash transactions fell by 33% in comparison to March 2014 numbers, suggesting that cash sales have been going down pretty consistently for the past year. According to CoreLogic, all cash sales peaked in 2011 at 46.5% of all home sales in the United States. As the economy and home values have improved, this number has fallen consistently.
In general, individual investors account for a majority of cash sales. As home values have risen over the past years, individual investors will not have as much of a guarantee of return on investment. Investment groups have picked up the slack in some sense but as values rise, all cash transactions will continue to go down. In June, individual investors accounted for 12% of all cash transactions, with other groups, companies or firms accounting for the other 10 percent.
Having less cash transactions helps homebuyers with third party financing better compete against other buyers for a listed home. Due to the fact that all cash transactions are very clean, neat and quick, its hard for any seller to choose financing over all cash offers. Having less all cash offers floating around the market will help other home buyers get the home they want at the price they want.
Hart Real Estate Solutions