With all the problems that we read about obtaining financing for real estate these days, it has raised some discussion about just paying cash for real estate. Tallahassee has never been a town filled with people with a lot of excess cash, so I really don't see a new trend towards cash buyers starting any time soon.
Of course, if home prices continue to fall as we expect, there will be more cash-laden investors who come to claim real estate investments in Tallahassee.
I'm also concerned about the high level of cash sales. In both the Orlando and Sarasota markets, cash sales are accounting for 60% of all sales. This is unbelievably high, and I don't know how long this trend can continue.
Whoa, 60% of all buyers are paying cash for real estate in the Orlando and Sarasota markets? That is very hard to believe. So what's the story in Tallahassee?
Cash For Real Estate In Tallahassee
In order to determine how many people were paying cash for real estate in Tallahassee, I studied all recorded arms length sales of single family detached homes, condominiums, and townhouses in Leon County, Florida. What I found was not surprising.
As we can see in the real estate graph above, the percentage of buyers who are paying cash these days has doubled from our traditional rate of about 15%, to a whopping 33% in 2011. So is paying cash for real estate a new rising trend, or is there a simple explanation for what we are seeing?
This graph shows that the number of people who pay cash for real estate in Tallahassee has remained fairly consistent. The reason that we see the percentage doubling is because the market is performing at only half the rate of home sales that we normally see. So I believe this is fair evidence to support that cash buyers have not left the market, rather it is those buyers who are borrowing money that have been most effected.
So which loan product out there has caused the most chaos in the Tallahassee housing market?
This graph shows that convention loan products are the real story here. Tallahassee was recording nearly 2,500 conventional loans for purchase by the end of the 1990s, yet this year we will only see about 1/3rd of that amount. This is just a normal corrective phase that was needed due to the crazy lending practices from 2004 through 2006. This too shall pass.
If you are interested in buying a home and want to take advantage of our free mortgage counseling services, just drop me a note (<- By clicking that link) and we'll schedule you to meet with an expert to help you determine your best home purchasing solution. Whether or not you plan to pay cash for real estate in Tallahassee, you should understand all of your options and opportunities in order to get the absolute best deal in today's housing market.