Whatâ€™s the Deal?
Cash buyers have come out of the woodwork in Tucson and are snapping up properties left and right. Take a look at the trends over the last five years:
|Total Properties Sold||Cash Deals||Percentage of Market|
And just an FYI, to keep things simple I only included Single Family Residences (SFRs) in these statistics but Iâ€m sure if I included everything else (condos/townhomes/rental properties/land) the trend would be similar; cash buyers are just making moves left and right.
Where Is This Happening?
This trend is not just in Tucson but is occurring all over the US:
Buyers who appear to have used cash to purchase their homes accounted for 46.7 percent of all May sales, down from 48.0 percent in April but up from 42.0 percent a year earlier, based on an analysis of public property records. The median price paid in these seemingly all-cash deals in May was $105,000, down from $112,000 in April but up from $89,250 a year ago.
All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who canâ€™t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.
Buyers who appeared to have paid all cash â€“ meaning there was no indication that a corresponding purchase loan was recorded â€“ accounted for 27.1 percent of March sales. In February it was a revised 30.0 percent â€“ an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.
With financing still difficult to obtain, all-cash buyers and deep discounts on distressed properties are propping up sales, said Peter Zalewski, a principal at Bal-Harbour-based Condo Vultures.
About 60 percent of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit.
So What Does This Mean?
Cash buyers coming out of the woodwork can only be a good sign. It shows people are finally seeing opportunity for investment/growth/return and are willing (and able) to put their cash back into the market.
Any market recovery will start with investors trying to make their money and while the rest of the economy may be sluggish the real estate market will be the first to turn around.