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More wealthy consumers are closing with all-cash transactions, helping them to triumph in bidding wars.
Nearly one-third of U.S. home purchases this year have been made to cash buyers. That represents the largest share since 2014, according to a housing report from Redfin that tracked county records across the country from January 2001 through April 2021.
“I’ve never seen more cash in Boise’s housing market than I’ve seen in the past year,” said Shauna Pendleton, a real estate professional with Redfin in Idaho. “I just sold a $700,000 home to a cash buyer last week. The entire $700,000 came from his E*Trade account.”
Remote work has allowed some homeowners to sell their homes in high-priced locales like San Francisco and then relocate to less expensive areas. The pricey sales of their homes are allowing them to then pay cash for a new home.
Another factor: Investors are increasing their presence in the housing market. U.S. home purchases to investors or second-home buyers tend to account for the biggest bulk of cash sales. Investor home purchases comprised 17% of existing-home sales in May, up from 14% a year earlier. All-cash sales accounted for 23% of transactions in May, according to the National Association of REALTORS®.
The growth of all-cash sales is making it difficult for first-time home buyers and lower-income home buyers to compete. About two-thirds of home offers written over the last month faced a bidding war, according to Redfin’s data.
All-cash purchases are the most common in the following locales:
West Palm Beach, Fla.: 52.6% of home purchases this year were paid for with cash
Naples, Fla.: 52.5%
Nassau County, N.Y.: 50.2%
North Port, Fla.: 49.4%
Port St. Lucie, Fla.: 46.2%
Greenville, S.C.: 45.4%
Palm Bay, Fla.: 44.1%
Cape Coral, Fla.: 44.1%
Des Moines: 41%
Jacksonville, Fla.: 40.1%
Source: “Share of Homes Bought With All Cash Hits 30% for First Time Since 2014,” Redfin (July 15, 2021)