Is Paying Cash For Real Estate Purchases A Growing Trend?

By
Real Estate Agent with Joe Manausa Real Estate 8508880888
https://activerain.com/droplet/q9g

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.

Yesterday, I received some feedback and conversation about the article on Foreclosures that I wrote from Sarasota real estate agent Keith Kropp, who shared this interesting statistic:

Realtor Quote Cash For Real EstateI'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.

Cash For Real Estate In Tallahassee

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?

Cash Buyers In Tallahassee Real Estate

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?

Conventional Loans Tallahassee

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.

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Rainer
218,050
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

Here in the La Quinta and Palm Springs area of California..Cash is definately King!  I'm with the Agent from Sarasota..lots of cash floating around out here in the California desert..

Dec 23, 2011 02:11 AM #1
Rainmaker
461,610
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

The headline of your article Is Paying Cash For Real Estate Purchases a Growing Trend? ....caused me to recall several years ago, a grungy looking man in a rusted farm truck came into our office with a paper sack full of cash...end result, he bought 12 acres of land on the Big Island for cash.  We closed in two weeks!

Dec 23, 2011 02:15 AM #2
Rainmaker
1,179,722
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Wow Kelly, that is interesting. I wonder how much is "more cash buyers" and how much is "few financed buyers"

Dec 23, 2011 02:18 AM #3
Rainmaker
320,311
Kathy Torline
ERA Herman Group Real Estate - Colorado Springs, CO
Colorado Springs Real Estate Blog 719-287-1049

Interesting chart.  Here in the Colorado Springs area, about 1/3 of the buyers are paying cash; and the numbers seem to be increasing.

Dec 23, 2011 02:19 AM #4
Rainmaker
1,179,722
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Bruce, we need more rusty trucks in Tallahassee!

Dec 23, 2011 02:19 AM #5
Rainmaker
1,179,722
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Thanks Kathy. 1 in 3 seems to be what I hear out of most markets.

Dec 23, 2011 02:20 AM #6
Rainer
414,449
The Keith Kropp and Wayne Rogers Team
Atchley Properties - Sarasota, FL
Keeping The Focus On You!

This is a very interesting post, Joe.  It makes sense and you put some good analysis behind it.  I know Sarasota historically has had a higher percentage of cash buyers due to the large number of affluent retirees to the area, but I haven't researched it and doubt it was ever as high as it is now.  Our sales numbers are very strong and getting stronger, although nothing like during the inflated boom.  However, Orlando has never been the level it is at now in the 26 years I practiced real estate there.  I'm not sure it is sustainable and the next year will be interesting.  But that's real estate, it continues to surprise us!

Dec 23, 2011 03:36 AM #7
Ambassador
779,627
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

We are seeing investors coming in and competing with 1st time buyers for modest homes. Folks that can't qualify for loans need a place to live. And investors are simply filling that demand.

Dec 23, 2011 04:18 AM #8
Rainmaker
798,169
Cindy Edwards
RE/MAX Checkmate - Johnson City, TN
CRS, GRI, PMN - Northeast Tennessee - 423-677-6677

This is a great post and so true!  The loan process is so frustrating in todays market.  Investors are picking up deals with their CASH while first time home buyers are getting frustrated.

Dec 26, 2011 08:25 AM #9
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Rainmaker
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