Cash Buyers Continue to Dominate
June 23, 2011
For the fifth-straight month, cash buyers accounted for at least 30 percent of existing-home sales, the National Association of REALTORS® reported this week.
In May, all-cash buyers made up 30 percent of existing home sales, which compares to 25 percent in May 2010 and 12 percent two years ago, according to NAR.
Low prices from foreclosures are tempting cash buyers--who are mostly investors--and prompting them to snag deals. They’re turning many of their housing purchases into rentals and immediately finding quick profits, housing experts say.
"These are people who're ... getting back into the market because they see good value," says Stan Humphries, Zillow chief economist.
Cash buyers tend to dominate in cities where home prices have fallen the most and foreclosures are the most prevalent. For example, in Miami-Fort Lauderdale, 63 percent of first-quarter buyers paid in cash and in Las Vegas, which consistently boasts the highest foreclosure rate, cash buyers made up nearly 50 percent of first-quarter sales, according to Zillow.com.
Without cash buyers, "we would be in much worse shape than we are," says Jim Gillespie, CEO of Coldwell Banker Real Estate. "They recognize that this is the smartest time to buy." Home prices are 33 percent below the peak reached in 2006.
Source: “Cash Buyers Scooping Up Homes,” USA Today (June 22, 2011)
Updated: February 19, 2019