Cash is king for local real estate markets

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Boston Condos for Sale and Apartments for Rent

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Cash is king for local real estate markets

Benjamin Franklin overlaid on top of a house

(Illustration by The Real Deal with Getty)

Mo’ money, mo’ problems? Not if you’re a cash buyer in today’s housing market.

The share of homes purchased entirely with cash rose to 31.9 percent in October, according to a recent report from Redfin. Up two percentage points from a year earlier, the share of all-cash purchases reached its highest level since 2014, the brokerage reported.

All-cash real estate buyers

All-cash home purchases cratered at the start of the pandemic, representing just 20.1 percent of purchases in April 2020, the lowest on record since Redfin started tracking the metric in 2011.

Buyers started throwing around all-cash offers shortly thereafter, though, motivated to secure a bargaining edge in bidding wars against competitors, all of whom stood to benefit from historically low mortgage rates.

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Boston real estate

Higher Boston condo mortgage rates

Fast forward to today and it’s high mortgage rates — at least relative to a year ago — prompting prospective buyers to lay out all-cash deals. Mortgage rates have retreated back below 7 percent, but remain elevated significantly compared to a year ago. Paying in cash helps buyers avoid high monthly payments.

Many all-cash buyers are parking their funds in Florida. Almost half of the homes bought in October in Jacksonville and West Palm Beach came in the form of all-cash deals. Affluent buyers in the state are pushing those levels higher.

But buyers in more affordable locales are also pulling out cash to secure the homes of their dreams, sans loans. Cleveland and Cincinnati both ranked in the top five markets for share of all-cash deals in October, while markets such as Philadelphia and Riverside, California, also saw significant year-over-year increases.

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Boston condos for sale

Happy real estate sellers

The ability for all-cash deals to be transacted isn’t only a boon for buyers — it can be good for sellers, too.

“For home sellers, it’s reassuring to know that there are still some cash buyers in the market, and that you can attract them at the right price,” Redfin chief economist Daryl Fairweather told Insider.

The report analyzed county records across the 39 most populous metro areas in the country. A purchase is said to have been in all-cash if no mortgage loan is recorded on the deed.

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Boston real estate

Source: Business Insider and Real Deal

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