Percentage Of “Cash Buyers” For Existing Homes Has Doubled To 33% Latest Statistics Show As Investors Close Deals; FHA 203k Renovation Financing Can Increase Ability Of Homebuyers Looking To Purchase “Distressed” Properties

29 03 2011


  • A record 33 percent of existing-home sales were made to cash buyers in February 2011
  • An annualized rate of 4.88 million properties are projected  for 2011
  • Only 15 percent of the 4.82 million annualized sales in 2008 were cash sales
  • 50% of all purchases were cash in Miami, Las Vegas and Phoenix areas
  • Prices have plunged in those areas and bank-owned properties dominate the market because of high foreclosure rates
  • Cash buyers paid an average 36 percent less than distressed properties bought with a mortgage
  • Investors buy houses at a discount with cash and then flip them to first-time homebuyers using a mortgage
  • Lenders reject mortgage applications for foreclosed properties because the homes lack utilities  and are in poor condition
  • Empty nesters, or couples with children who have gone out on their own, often pay cash when they move to a smaller house

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Home Purchase Financing: Importance Of Experienced Mortgage Lenders Reflected By Data Showing Cash Buyers Increasing Nationally As Sellers Prefer Quick And Easy Closings

8 07 2010

 Cash buyers made up about 16 percent of sales overall in May, while conventional sales made up 43 percent of sales and FHA sales made up 42 percent.

In some areas, however, cash transactions outnumber those with FHA financing — and even outnumber conventional loans. According to the Arizona Regional MLS (which covers the Phoenix metro area), cash buyers accounted for 41 percent of purchases from January through May.

That figure was 29 percent and 25 percent for FHA and conventional loans, respectively. Moreover, those proportions are not significantly different from those for the same period last year, when cash buyers made up 39 percent of sales and FHA and conventional loans each accounted for 28 percent of sales.

According to the Houston Association of Realtors MLS, which covers the greater Houston metro area, 22 percent of single-family home sales from January through May were in cash; 39 percent were financed with conventional loans, and 34 percent were financed with with FHA-backed loans.

As overall sales fluctuated, however, there were proportionally more cash and FHA sales than conventional loan-financed sales. In January, for example, sales overall fell 10 percent year-over-year. Meanwhile, cash and FHA sales fell only 1 percent each, while sales with conventional loans fell 20 percent.

In May, FHA sales in the Houston market were up 42 percent compared to May 2009, while cash sales were up 18 percent, and conventional sales were down 2 percent. Total sales were up 17 percent.

Metropolitan Regional Information Systems Inc. (MRIS), the largest MLS in the nation, covers the Mid-Atlantic region, including parts of Maryland, Northern Virginia, Pennsylvania, West Virginia and Washington, D.C. Cash buyers made up about 16 percent of sales overall in May, while conventional sales made up 43 percent of sales and FHA sales made up 42 percent.

Sales overall rose by 20 percent in May compared to May 2009, though FHA and cash buyers rose faster (by 24 percent each) than those with conventional loans (17 percent).

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