More U.S. homebuyers turn to self-financing in cash
U.S. homebuyers are increasingly paying in cash.
The share of all-cash deals rose to the highest since 2013 last year, while institutional investors, who usually account for many cash sales, retreated, according to data from real estate data analytics firm Attom. That suggests more regular buyers turned to self funding to dodge punishing mortgage rates.
It’s particular true in the Southeast, home of most of the 13 cities with a cash share above 50 percent last year in the Attom data. Augusta, Ga., known for hosting the U.S. Masters golf tournament, topped them all with 72 percent.
Realtors in the region say many individuals who would have been priced out by Wall Street money a year ago are now able to step in, in particular buyers who made a profit selling property in more expensive parts of the U.S.
“It’s mostly people retiring, or people who have sold something in other parts of the country and made a lot of money off it and are able to pick up something here for cash,” said Heather Kruayai, a Redfin Realtor in Jacksonville, Fla., where the median home price is less than half that of California.
Roughly half of the offers Kruayai receives nowadays come from individual buyers.
Besides high mortgage rates, two major factors at play today help explain the jump in cash sales. Many places in Sun Belt states remain relatively affordable compared with the Northeast and West Coast, giving people who sold there an edge — and cash. And institutional investors, burned by the sudden turn in the market last year, pulled back from once-hot markets.
Home sales dropped last year amid rising interest rates and prices cooled from pandemicfueled highs. Investor purchases fell by a record 46 percent in the fourth quarter of 2022 from a year earlier, according to a report from brokerage Redfin.
In Atlanta, about 53 percent of homes sold last year were paid in cash, based on Attom data. Jasmine Harris, a Redfin Realtor there, said she’s seeing people who sold their California home for half a million or a million dollars and purchased an Atlanta property for about $400,000.