Fewer Buyers Are Bringing All-Cash to Close
DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 05, 2016
One in three buyers paid all-cash to close on their real estate transactions near the end of 2015, according to new data from CoreLogic. The share of all-cash transactions dropped to 33.9 percent in October year-over-year – way down from the 46.6 percent peak reached in January 2011.
Read more: Cash Sales Near 50% in These Cities
The number of all-cash transactions dropped to 33.9 percent year-over-year in October. Still, historically on a pre-crisis average, cash sales tend to make up about 25 percent of the market. CoreLogic estimates that cash sales will return to that level by mid-2018.
Sharp declines in REO sales is the main reason cash sales are steadily dropping, CoreLogic notes. REO sales comprised 7.3 percent of all residential home sales in October 2015, a third of the peak in January 2011 at 23.9 percent.
“Foreclosure completions have fallen substantially over the past few years across the nation,” saysFrank Nothaft CoreLogic’s chief economist. “This has led to a drop in REO sales. Roughly one-half of REO homes are bought for all cash. Thus, the drop in REO has been an important reason for the national decline in the cash share of all sales.”
The following states continue to see cash sales remain higher than 40 percent in October:
- Alabama: 51.7%
- Florida: 46.7%
- New York: 46.3%
- West Virginia: 44.4%
- Indiana: 40.8%
Source: “What’s Driving Down the Cash Sales Share?” DSNews (Feb. 4, 2016)