Cash Sales Dominate Real Estate MarketBlog, Real Estate Tips, Selling
More than half of all homes sold last year and in 2013, so far, have been purchased mortgage-free, according to economists at Goldman Sachs Group. Prior to the housing crash, about 20 percent of all homes sold were purchased without financing. All-cash sales have more than doubled over the last seven years. The analysis estimates that around 20% of all homes sold before the housing crash were “all-cash” sales. The surprisingly large cash-share of purchases helps to explain why home sales have jumped over the past two years despite smaller increases in the new mortgage activity indexes, such as the MBA’s mortgage application index. The analysis also estimates that around 44 cents of every $1 of homes sold currently is being financed, compared to 67 cents before the crisis. There’s no exact way to know who is responsible for all of these cash purchases, though they are likely to include some combination of investors, foreign buyers, and wealthy homeowners that don’t want to go through the hassle of getting a mortgage before closing on a sale. The Goldman study analyzed home sales figures from the Census Bureau and the National Association of Realtors and mortgage-origination data from the Mortgage Bankers Association and Lender Processing Services.