“We’ve seen a tremendous increase in cash buyers since the housing downturn that we
haven’t seen before in history,” said Lawrence Yun, chief economist of the National
Association of REALTORS®. Yun said a decade ago all-cash home purchases were less
than 10 percent of the market but have increased steadily since 2008, to as much as 30
percent of sales.
Yun said the increase in more buyers paying cash for real estate reflected tight lending
conditions and an increase in investor sales, which account for the bulk of cash sales.
Increases in the number of international buyers, who often have financing difficulties when
purchasing a home in the U.S., are also adding to the rise in cash sales. NAR research
shows that 62 percent of international purchases were all cash; the percentage has
continually increased since 2007.
Recent NAR research on down payment sources may offer insights into how cash buyers
are receiving funds for home purchases. According the 2012 NAR Home Buyers and
Sellers Profile, 40 percent of repeat buyers use the proceeds from the sale of their primary
residence as a source of down payment, but downsizing boomers may have enough equity
left from their home sale to pay all cash for their next purchase. Yun also noted that one in
10 buyers rely on proceeds from the sale of stocks or 401K disbursements for down
payments; those with stable jobs and who saw investment gains in recent years may be
using those cash funds to buy a home outright rather than financing the purchase.
Dr. Grant Ian Thrall, president of the American Real Estate Society, agreed that cash sales
have increased dramatically in recent years. Thrall spoke at the session and conducted an
in-depth market analysis to gain greater insights into cash buyers.
“Research shows a bias toward cash sales for newer and lower priced homes,” Thrall said.
“Many of those sales are occurring within the first 60 days that the home is on the market,
and more than half sold within the first 120 days.”
Thomas Springer, professor of Finance and Real Estate at Clemson University, discussed
how time-on-market responds to employment changes and varies with shifting market and
economic conditions. Springer analyzed market data from more than two dozen metro
areas. His findings indicate that, at the property level, time-on-market is a function of
property characteristics, price and market factors; however, at market level, time-on-market
is a function of local, national and global economic and market factors.
Springer determined that time-on-market is a possible indicator of market conditions or risk
and that in a vibrant market, time-on-market is shorter, whereas distressed markets often
have a longer average time-on-market.
Yun said that tightened inventory conditions are also impacting time-on-market, which has
steadily decreased nationally since the start of the year, as are home buyers’ search
processes.
“Tightened inventories in some places mean homes are selling more quickly and reducing
time-on-market,” Yun said. “Our research shows that last year, home buyers saw 10
homes before buying, down from 12 the year before, and more than half of buyers reported
that finding the right home was the hardest part of the home search process.”
Justin C. Brennan
Estates Director
Harcourts Prestige Properties
La Jolla, CA
619-823-2120
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