helped drive the industry forward
Throughout the past few years, the real estate market
has been largely affected by cash buyers and in quite the
triumphant way. The industry and the greater economy as a whole
would not be in the recovering state that it finds itself in today
if it were not for cash deals. CoreLogic reports that corporate
balance sheets saw a boost in cash during the recession to the
highest levels ever recorded. This, as it turns out, then resulted
in a far greater circulation of cash amongst the population now
that the recession is largely considered to be over.
In CoreLogics MarketPulse issue for this month, there
are specific pieces entitled, Real Estate and the Impact of Cash
Sales, Fire Burn and Caldron Bubble, and Recovery, a Long Row to
Hoe, which all help to explain how cash sales have soared as of
late at all price points throughout the entire country. While when
such individuals are able to pay for property in cash has helped
both grow and stabilize the real estate markets in all geographies
of the United States, there has been a negative factor. Those
hoping to trade up to a more valuable residence and those who are
first time home buyers are at the mercy of cash buyers superiority.
Cash buyers when not purchasing luxury homes for themselves are
often often swooping up homes to turn them into income (rental)
properties. This only further complicates the difficult home buying
process for the first time/trading up buying segment to
compete.
What used to be seen as a significant portion of the
given market data, homes in the early 2000s saw cash only sales
take up roughly 25% of all transactions covered. As the economic
recession in 2007 and 2008 commenced the simultaneous downfall of
the real estate industry, cash sales began to climb. Essentially,
those with the deepest pockets were simply not as money constrained
as the majority of the population was. With the dramatic falling of
home values, it was thus an opportunistic time to buy. Cash sales
slowed around 2010 and a moment of stabilization occurred. However,
as of the conclusion of May of 2013, cash sales have been shown to
once again climb in popularity to where they now represent 39% of
all closings; although this is slightly down from the 40% of total
sales they accounted for in May of 2012.
CoreLogic is adamant that if cash sales were taken out of the
equation, both sales would be down and price declines would be the
norm. As added proof to this claim, the median price for cash sales
in the past year alone have increased by a massive 24%. As it turns
out, this 24% helped to pull up the overall sales prices for all
transactions by 15% over the past twelve months. Ultimately,
CoreLogic remains optimistic that despite the rising rates and
continuous rise in prices, buyer demand should not subside in the
slightest in the near future.
More Information: Mortgage Daily News