Pretty amazing if true, I know we are in no position to pay cash for a home, and I’ve made right around 100,000K for a few years now. Our newest car is a 2006. At 15,000 I paid more for that car than all the others I’ve bought combined. We own our home and two quarters of land. Last child is a junior in college.
Who is it that has enough cash to buy a home?
“Who is it that has enough cash to buy a home?”
“Although RealtyTrac doesn’t identify who has cash-in-hand, experts say wealthy Americans and downsizing retirees account for some of these all-cash deals. Investors who are keen to make a profit by buying low and renting those properties – or flipping them – also drive up the number of all-cash deals,”
“Some of these cash buyers are baby boomers who’ve managed to build up equity through previous real estate purchases. Others are investors, many of them flush with money from China and other ventures overseas. Riccardo Ravasini of Rava Realty, who handles properties in Florida and New York, says Manhattan in particular sees a lot of cash buyers, since it’s a “special market that appeals to the entire world.”
“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. Mortgage lending standards have sharply tightened up since the housing bubble, with banks scrutinizing borrowers’ tax returns and bank statements to verify their incomes and the source of their down payment.”
http://www.doctorhousingbubble.com/cash-buyers-real-estate-all-cash-buyer-percent-of-market/
Individual real estate investors, comprise most home purchases with cash, making up 16 percent of homes in July, lower than the 17 percent in the previous month after pole jumping to a cyclical peak of 22 percent in February 2013.
I guess I am one of the guilty ones except I bought the first week of August. Got it on the market as rental property.
I suspect most of these are investors.
With super low interest rates, hedge funds are scooping up hard assets. They know eventually inflation is gonna spike.
My daughter’s starter home in a good school district here in Indiana was purchased by a Cali hedge fund and turned into a rental property.
They buy up enough houses to support a local manager who oversees the rental op.
My son works in banking, it absolutely IS true. Where I live, it's closer to 50%.
It's mostly older people, who are downsizing for retirement. They have a lot of equity in the home they're selling... using it to pay cash for smaller houses.
It's that, and... people speculating on foreclosures, that are FAR less expensive than normal houses..
Many around here, in the inner city areas, are selling for $10-50K. Then, the new owner rents it out to poor minorities, who are on Section 8 Federal housing support.
The renters then rent out rooms, for cash... and, EVERYONE makes money... thanks to Good 'Ol Uncle Sam.
IT's a helluva RACKET!
Speculators and foreigners looking for safety from their own bubble economies and central banking machinations.
“Who is it that has enough cash to buy a home?”
I sold my shack in RI and was able to pay cash for a mansion in Texas. OK it wasn’t a mansion but it was a new home with more square footage so it was a mansion to me. My house in Texas is already worth $40,000 more than I paid for it 2 years ago and the house I sold in RI is worth $65,000 less than I sold it for 4 years ago.
Our local paper took a look and it's large companies paying cash for houses. They buy, fix 'em up and rent 'em out...
My guess is they're buying on the oft chance the housing market will explode up in value... or the dollar will crash or something will happen that will make them a bundle of money. Because renting out individual homes is not an easy way to make money. They must know something I don't...
Cash doesn’t have to mean you have the money accumulating in your bank account.You’d have cash for a home if you sold yours and bought another. Investor’s are paying cash, as are those who are downsizing.
We paid cash on a foreclosure a few years ago, too good a deal on a foreclosure with huge posibilities, we couldn’t pass on it. Like you we owned our home, and made up the difference we had in cash, with an equity loan on our existing residence (which we owned free and clear) and then we paid that off (the interest rate on the home equity loan, while we were paying on it was 2.75%), so on paper we paid cash for the foreclosure.
I know when homes were rock bottom, several folks our age who did the same, and now in our area prices are starting to rebound, so if we wanted to sell (which we don’t) we’d see a hefty profit on our investment.
So even though you may not have the “cash” in your bank account, you have “cash” available to you.
RE agents and sellers in my area are saying the cash sales are from people cashing 401ks and other retirement accounts. Some sales of 40 acres and up are to families who are then rehabbing the existing buildings and also building additional homes for family members.
There are occasional stories of foreign buyers, but they are actually living on the place, not simply investing and then renting. One local real estate mogul is buying up all the low rent multi-unit places they can, but will supposedly not purchase single family residences. This group literally owns the entire Main Street in several small villages, getting rental income from the shops on the lower levels and the apartments above them.
Buyers who think they have the upper hand are losing out when competitors bid up a property and it then sells really quickly for the higher price.
It is also common for people to first sell a larger property,as outlined above, then quickly turn around and pay cash for a smaller one.
These are all both rural land with improvements and single family homes in small towns and villages.
I paid cash for my home. Inheritance.
I imagine though that a large portion of the cash purchases are actually house flippers. The ones that I do business with that survived the crash are making a ton of cash right now.
Foreigners, i.e. Chinese
“Who is it that has enough cash to buy a home?”
Investors...
Wall Street has been throwing a ton of money at REITs buying Repos for about a year now
In my neighborhood in LA almost all sales are all cash. In fact, at the time of the open house, there will usually be multiple offers of all cash.
If you like a house, you must act immediately. It will be gone almost immediately after the sign goes up. I bought mine before the sign went up and did a 2 week escrow.
A kid here in the office, right out of college just paid all cash for his first townhouse! Eek!