Cash Sales Jump to Highest Level Since March

IRVINE, CA--(January 12, 2016) - RealtyTrac®, the nation's leading source for comprehensive housing data, released November home sales data derived from publicly recorded sales deeds showing that the share of cash sales jumped to 38.1 percent of U.S. single family home and condo sales during the month -- up from 29.8 percent in October and up from 30.9 percent a year ago to the highest level since March 2013, when 38.8 percent of all sales were all-cash.

High-Level Takeaways:

• The 23 percent year-over-year increase in share of cash sales nationwide followed 29 consecutive months of annual declines in the share of all-cash home sales.
• Major metro areas (population of at least 1 million) with the biggest annual jumps in share of cash sales were San Francisco (up 89 percent), San Jose (up 74 percent), Columbus, Ohio (up 73 percent), Milwaukee (up 71 percent), Providence (up 59 percent), and Portland (up 53 percent).
• Major metro areas with the highest share of cash sales in November were Miami (59.7 percent), New Orleans (54.8 percent), Oklahoma City (51.4 percent), Tampa (50.6 percent), and Orlando (49.9 percent).
• Interactive heat map showing share of cash sales in local markets.

"The jump in cash sales is likely a knee-jerk reaction to the new documentation and disclosure rules for mortgages that took effect in October, making it even more difficult for buyers using financing to compete with cash buyers in the already competitive housing market," said Daren Blomquist, vice president at RealtyTrac. "Global economic instability may also be driving more foreign cash buyers back to the relative safety of U.S. real estate."

"Many factors have increased the use of cash in the marketplace. including continued activity of institutional investors, large equity buyers seeking negotiation advantage in a low available inventory market, as well as an increase in immigrant purchasers whose culture prohibits use of debt instruments in making purchases," said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. "As we approach 2016, available market inventory is predicted to be much of the same. As interest rates continue to rise, and new government regulations create added hurdles for some consumers to qualify for mortgage financing, predictions are for cash sales to account for more than one-third of the closed residential transaction volume for much of 2016 across the Ohio markets."

"One reason for the cash sales are we a world destination for flight/security money," said Mike Pappas, CEO and president of Keyes Company, covering the South Florida market. "We have strong Central and South American interest in creating a safe haven for their families. The new mortgage rules do make it more difficult for these individuals to qualify for a conventional mortgage as their income source is not in the U.S."

"We did experience tighter inventory than last November and December, which can cause an increase in multiple offers, which certainly can contribute to a higher number of cash transactions," said Greg Smith managing broker with RE/MAX Alliance, covering the Greeley market in Colorado. "It will be interesting to see how Q1 2016 plays out. After visiting with our other brokers, it seems more sellers are holding off to place their homes on the market for spring 2016."

"Given that we saw spikes in cash sales at the state, as well as national level, we can assume that this was not a geographically isolated incident and that there were more fungible reasons for it," said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. "We tend to see seasonal spikes in all-cash home sales in the winter months but this jump was somewhat exaggerated. I believe that we can attribute this to the remarkably tight housing market in Seattle. Buyers that have the ability to pay cash understand that they are in an enviable negotiating position when offers are being reviewed."

Definitions

All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Report methodology

The RealtyTrac U.S. Home Sales Report provides percentages of all sales that are sold to cash buyers, at state and metropolitan statistical area. Data is also available at the county and zip code level upon request. The data is derived from recorded sales deeds, foreclosure filings and loan data. Statistics for previous quarters are revised when each new report is issued as more deed data becomes available for those previous months.

About RealtyTrac

RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary Homefacts.com, the company's proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac's data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.