More Home Buyers Bring Cash to Closing

All-cash purchases are on the rise, despite a decrease in distressed sales and investor activity, according to NAR's REALTORS® Confidence Index of about 3,000 survey respondents. All-cash sales made up 33 percent of transactions in the first quarter, compared to 31 percent in 2013.

“Distressed home sales, most popular with investors who pay cash, have declined notably in the past two years, yet the share of all-cash purchases has risen,” notes Lawrence Yun, NAR’s chief economist. “At the same time, investors have declined as a market share, indicating other changes have been underway in the marketplace.”

Distressed home sales fell to 15 percent in the first quarter. For comparison, in 2013, they were 17 percent of the market and in 2012 they comprised 26 percent of sales. NAR predicts that distressed home sales will drop to a single-digit market share by the fourth quarter of this year. Meanwhile, investors’ share in the market is also falling – at 19 percent in the first quarter of this year compared to 20 percent of buyers in 2012.

“These findings beg the question as to why we’re seeing higher shares of cash purchases,” Yun says. “The restrictive mortgage lending standards are a factor, but the higher levels of cash sales may also come from the aging of the baby boom generation, with more trade-down and retirement buyers paying cash with decades of equity accumulation.”

Trade-down buyers have been rising – making up 29 percent of buyers last year, according to NAR. Also, “a majority of foreign buyers pay cash as well, and the five-year bull run of the stock market has also provided financial wherewithal among higher wealth households,” Yun notes.

In Florida, more than half of all homes purchased were from all-cash deals, according to NAR’s data.

“Florida is the most popular state for international buyers, who generally pay cash, as well as vacation-home buyers who frequently pay cash,” Yun says. “In addition, downsizing retirees are known to pay cash from the proceeds of their homes in the north. This helps to explain the disparity there, but that isn’t the case in most other states.”

All-cash deals account for close to four out of 10 transactions in Nevada, Arizona, and West Virginia.

Source: National Association of REALTORS®

About Ady Simion (Realtor and Public Notary)

Ady Simion was named in the Top 1% of all agents for NRT LLC a subsidiary of Realogy that operates a variety of real estate offices under brands such as Coldwell Banker, Sotheby's International Realty, Century 21, The Corcoran Group, and the technology-based brokerages ZipRealty and Climb Real Estate. NRT has 787 offices and 47,000 sales associates. Selling and buying property can be very stressful but with the right agent it can be profitable and a fun experience. Ady is also a Notary Public and being a people person he wants to help negotiate for his clients making their transactions as smooth as possible. Ady’s goals are simple: He wants to be the best source of information on the Los Angeles area Real Estate market, as he assists clients through each transaction with care and professionalism. He is proud of his large referral base of clients who have placed their trust in him over the years. Why him, when there are so many good people out there?!?! • Sellers will have their property exposed to the largest team of sales professionals in the world by far. Coldwell Banker Agents sale more homes than anyone else. • Buyers will have the opportunity to view more properties exclusively. • And most importantly when you hire him you get a whole team working for you not just “only one person”. Ady Simion started his Professional Career as an Insurance Agent, and then mastered the Mortgage Industry focusing on helping buyers and sellers achieve their life dreams. He now is an Agent with the Largest Residential Real Estate Company in the nation and the world, Coldwell Banker, at the Pasadena office which is the leader in the areas in which he specializes. After finishing College Ady has consistently been a Top Producer in every office/business he worked at. He speaks English, Romanian and Spanish. Real Estate is constantly changing and working with an agent that has been involved in the Real Estate buying/selling process most of his life is always beneficial for clients. Call, text or e-mail him or just stop by to say Hi and ask any real estate questions you may have.

Posted on May 12, 2014, in Uncategorized. Bookmark the permalink. Leave a comment.

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