Even with prevailing low mortgage rates, an increasing number of homebuyers prefer all-cash payment – be it for mid-priced homes or luxury apartments.
By paying in cash, homebuyers speed up the transaction process at a time when inventory of homes is low. Homebuyers opting for traditional financing have often reported being beat out by cash buyers.
"Cash buyers don't have to go through the rigors of the loan process, and everyone at the moment is dreading appraisals coming in low," said Gillian Long, a real estate agent with Intero Real Estate Services' Folsom Lake office told the Sacramento Bee.
Also, low home appraisals are driving many to consider all-cash purchases. Real estate agents confided to the paper that home appraisers have been conservative since the housing bubble burst, and often deliver low estimates. This in turn complicates the process for borrowers.
On the number of all-cash deals, the paper reported that nearly one-third of all homes sold in Sacramento County and West Sacramento were financed by the owners, either by liquidating stocks, pulling it out of savings or by selling other higher-priced properties.
Similarly, in Irvine, California, all-cash transactions are on the rise. It account for 33 percent of homes sold this year. And the number has been increasing since 2009.
It was 20 percent in 2009, 26 percent in 2010 and 30 percent in 2011, the Orange County Register reported.
Surprisingly, all-cash transactions are popular in the luxury segment too. For instance, Chrisitie’s International Real Estate reported that for 87 percent investors who bought homes between $5 million to $10 million, cash is the king.
“The higher the price,” Ron Shuffield of Esslinger-Wooten-Maxwell in Miami, said in a statement, “the larger the percentage of cash in the deal.”
Agrees Julie Faupel of Jackson Hole Real Estate Associates in Wyoming.
“At the peak of the market in 2007, 25 percent of our buyers paid cash and the rest financed their home purchase because financing was so inexpensive.
Today, 60–70 percent of our clients are cash buyers and most are from the U.S. Like many international buyers, high-net-worth individuals in the U.S. are pulling their money out of the stock markets and investing in real estate as a long-term safe haven.”
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