Cash buyers snatch a third of US home sales

Second-quarter data show mortgage applicants outnumbered in some markets

National Weekend Edition /
Aug.August 28, 2021 12:00 PM
More and more homebuyers and investors are coming to the negotiating table with cash in hand. (iStock)

More and more homebuyers and investors are coming to the negotiating table with cash in hand. (iStock)

More and more homebuyers and investors are coming to the negotiating table and closing deals with cash in hand.

A third of all U.S. single-family homes and condominiums sold in the second quarter were purchased with cash, up from 20.6 percent a year prior. It was the highest percentage since the first quarter of 2015, according to L.A. Biz.

In a number of states and cities, cash accounted for the majority of sales. Across Georgia, 62.1 percent of homes that sold were bought with cash, a 147 percent increase over 2020. In Michigan, 58.4 percent did, and 52.5 percent in New York.

Some individual metro areas saw even higher percentages. The highest were Buffalo and Detroit, where 71 percent and 68.1 percent of sales were cash, respectively.

Both of those cities suffered huge drops in population as the Rust Belt lost manufacturing jobs in the late 20th century, and some homes fell into disrepair and lost most of their value. Bargain-hunting house flippers and single-family rental investors with cash on hand may now be squeezing out traditional homebuyers in those markets.

Cities and states with growing shares of cash buyers tended to see a drop in the number deals closed with Federal Housing Administration loans. FHA loans are popular with first-time homebuyers because they offer low down payments, but usually require insurance fees to offset the risk of default.

Investors since the pandemic have thrown money into the single-family rental space, first anticipating widespread foreclosures — which had birthed the single-family rental business during the last financial crisis — and now marketing to families priced out by record-high home valuations.

[L.A. Biz] — Dennis Lynch





    Related Articles

    arrow_forward_ios
    Home sales dipped in August after two months of increases
    Home sales dipped in August after two months of increases
    Home sales dipped in August after two months of increases
    Here are the homes that billionaire Paulsons will spar over in divorce
    Here are the homes that billionaire Paulsons will spar over in divorce
    Here are the homes that billionaire Paulsons will spar over in divorce
    Builders broke ground on more residential properties in August than had been predicted, but the number of single-family housing starts fell below expectations. (iStock)
    August housing starts rose but single-family properties fell short
    August housing starts rose but single-family properties fell short
    Compass CEO Robert Reffkin and First Alliance Title co-founders Lon Welsh and Greg Parham (Compass, First Alliance)
    Compass picks up another title company
    Compass picks up another title company
    Joshua Kushner and Karlie Kloss, with the Puck Building at 295 Lafayette Street (Photos via Getty, Ceros)
    Joshua Kushner, Karlie Kloss selling Puck Penthouses condo
    Joshua Kushner, Karlie Kloss selling Puck Penthouses condo
    Covid surge dims enthusiasm for ICSC Vegas conference
    Covid surge dims enthusiasm for ICSC Vegas conference
    Covid surge dims enthusiasm for ICSC Vegas conference
    Blueground CEO Alex Chatzieleftheriou (Getty, LinkedIn via Chatzieleftheriou)
    Blueground raises $140M in Series C equity, valuing startup at $750 million
    Blueground raises $140M in Series C equity, valuing startup at $750 million
    (Getty)
    Freddie Mac study of 12 million appraisals shows racial disparity
    Freddie Mac study of 12 million appraisals shows racial disparity
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...