Homebuyers who showed up with cash have long had the advantage of beating the competition, but their grip on the market could crumble.
Seattle-based brokerage Redfin estimates that 15.2% of all home sales this year in the Denver metro area went to buyers who paid cash, up from 17.9% last year and the peak of 2012, when a sale of in five homes went to cash buyers.
The last time cash buyers had a smaller share of the Denver market was in 2009, when the country was recovering from a financial shock and left-handed mortgage lenders severely tightened their underwriting standards.
“With interest payments lower than ever before, many buyers would rather take out a home loan and put their money elsewhere, like the stock market, emergency savings accounts or home renovations,” the economist said. Redfin chief Daryl Fairweather in the report. “A lot of buyers who are using all the cash this year are probably trying to beat other bids in a situation with multiple bids.”
Nationally, all-cash home purchases peaked in 2013, when just over one in three home sales were made in cash and investors got good deals. So far this year, 24.3% of sales have been made in cash, the smallest share since 2007.
Fairweather argues buyers may be saving their money given that silver is cheap right now, but Anthony Rael, a local real estate agent at Re / Max Alliance, said the trendy market is also playing against buyers. cash in another way.
They generally wanted a discount in exchange for a faster, less complicated purchase. But in the current market, sellers who are not under contract for the first week, or even the first few days, have missed the mark in the price of a home, Rael said. The ads are spinning so quickly in hot markets like Denver that more and more sellers are realizing that if they can wait a few more weeks, it could earn them $ 10,000 or $ 15,000 more.
“Money is not necessarily king. You will earn more as a seller with a funded buyer, ”said Rael. And that extra money counts toward the next purchase, given the rising house prices.
Additionally, cash buyers tend to be more fickle, canceling offers more frequently than buyers who have struggled to secure financing, Rael said. In his 16 years, he has yet to see a buyer use a VA mortgage with no down payment on an offer.
Rael’s advice to cash buyers accustomed to a discount – “it’s time to pay”.