All-cash home sales on the rise
When research firm CoreLogic posted data earlier this month on all-cash home sales, it listed New York among a handful of states in which more than half the purchases were made that way.
Florida led the pack with nearly 60 percent of home sales being cash deals, but New York wasn’t far behind at almost 52 percent. The data were for February.
Before you start envying your neighbor’s wealth, though, keep New York City in mind. The Big Apple often skews statewide numbers.
And, indeed, that seemed to be the case: When I inquired about Capital Region sales, CoreLogic put the cash share of total sales here at just 27 percent in February.
The month is considered part of winter, when home buying tends to slow, and so the cash share of sales can seem larger, says Molly Boesel, a senior economist with CoreLogic, which is based in suburban Los Angeles.
But the Albany area’s all-cash sales that month mirrored what played out on the national stage as the percentage rose during the recession — as investors used cash to snap up “distressed” properties — then fell back as the recovery took hold.
In February 2011, for instance, the cash share of sales in Albany was 44 percent, according to CoreLogic; nationally, it was 46 percent that month, close to the peak for the housing crisis.
“There will always be cash activity,” Boesel told me in an interview, although she said the national cash-sale share remains far higher than the 25 percent it averaged before the recession.
Also keeping tabs on cash sales is the National Association of Realtors, which pegged all-cash transactions at 33 percent of home sales nationwide in the first quarter — higher than in the comparable January-March quarter in 2012 and 2013.
It’s a trend that has NAR scratching its head.
The cash-sale share is rising even as the number of “distressed” homes — those in foreclosure or classified as “short sales” by lenders — and the investors who bought and flipped them for resale are declining.
“These findings beg the question as to why we’re seeing higher shares of cash purchases,” said NAR’s chief economist, Lawrence Yun, labeling it “counterintuitive.” He speculated that part of the reason could be foreign buyers laying out cash for U.S. homes, or more restrictive mortgage rules that make getting a loan tougher. Or it could be well-to-do Americans buying homes with cash earned in the recent run-up in the stock market, or retiring baby boomers trading down to smaller homes and paying with cash generated by the sale of larger residences.
Boesel called all the suggestions plausible because it likely was “not any one thing keeping [cash sales] elevated.” She expects the share of cash sales nationally to be lower this summer than the 36 percent seen last year, but is unsure when the average will return to pre-recession levels.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at email@example.com.