All-cash real estate sales made up 38.9 percent of housing transactions in January 2015. While that’s a slight decline from the same month in 2014, it’s still well above historical averages, according to a new report by CoreLogic.
January marked the 25th consecutive monthly decline in the proportion of home sales made with all cash. Cash sales reached their peak in January 2011, when they comprised 46.5 percent of sales, but they averaged 25 percent prior to the housing bust. CoreLogic predicts the level of all-cash housing sales should fall back down to 25 percent by 2018.
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First-time and move-up buyers dependent on credit to finance a new home have struggled in some markets to compete with institutional investors and wealthy foreign buyers who promise a quick and easy close with an all-cash deal.
As the dollar strengthens and home prices increase, however, the appeal of residential real estate as an investment has declined. The easing of lending standards has helped credit-dependent buyers become a bit more competitive, although realtors in some markets have reported that downsizing baby boomers are now making all-cash offers on retirement properties after the sale of their family homes.
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Florida had the largest share of cash sales, with 56.3 percent, followed by Alabama (54.7 percent) and New York (48.2 percent).
Overall, sales volume remains strong. Pending home sales increased in February to their highest level since 2013, according to the National Association of Realtors, driven by big gains in the Midwest and the West.
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