30% of Real Estate Market Consists of Cash Buyers

A recent article by USA Today reports that cash buyers make up 30% of existing homes sales. A good portion of cash are buyers are investors who are looking to take advantage of declining home prices. Others are buyers who a few years ago weren’t able to purchase property but now can as a result of attractive home prices. In areas like Las Vegas where the foreclosure rate is the highest in the nation, cash buyers make of 49% of the market. In other cities like Miami, 69% of buyers paid in cash.  In this market, cash is king for a number of reasons. For one, lenders are reluctant to lend which in my opinion is a good thing.

This is forcing buyers to accumulate capital and purchase properties in cash or at the least leave a large down payment.  Another reason is with REOS, banks prefer cash over financing, even if that means an offer slightly lower than the listing price. Cash buyers will beat out buyers who use financing most of the time.  Cash buyers are the catalyst that keeps the Real Estate market moving. If it wasn’t for cash buyers, the market would be in worse shape then it is now.  As appealing as cash is however, it certainly has its pitfalls.

The U.S. dollar has been declining for some time resulting in a rise in inflation. It’s certainly possible that if this trend continues, we can see homes being purchased using precious metals such as gold or silver. States like Utah have passed legislation legalizing the use of precious metals as a medium of exchange. Other states are following suit.  Of course homes being purchased with gold or silver may not happen for sometime. Right now cash is king.

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~ by fnunez on June 23, 2011.

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