The real estate market has exploded. Beaten down during the collapse of the Great Recession, home prices took over a decade to work their way back to 2005/2006 prices in many cases. More recently, people have relocated from the largest cities due to the COVID-19 pandemic, which has moved prices in many markets to record levels. They continue to rise as, in a large number of markets, homes get more than one bid and owners get more than they have asked for. Despite a tick higher in interest rates, mortgage rates remain near decades lows, which has made houses more affordable.
The increase in price has driven two financial maneuvers as people hope to make quick profits on homes, or dispense with the need for mortgages completely. The first is home flipping. People buy homes to sell them for a quick profit. The hockey stick rise in prices has made this a more realistic way to make quick money.
In some markets, very many people have begun to pay cash for homes. One reason is that homeowners have houses in such great demand that they do not have to wait for potential buyers to get mortgages. If buyers do not have cash, they miss out on a home they would like to own. Realtor.com data journalist Elena Cox commented: “As the old saying goes, cash is king. And that’s especially true in today’s pandemic-fueled thrill-ride of a real estate market, where homes sell in days—or even hours—and usually after multiple offers.”
Realtor.com looked at the 300 largest markets to find those where the largest percentage of buyers pay cash. All-cash purchases accounted for 20% of all purchases in the markets in the first two months of the year. Eight of the 10 cities were relatively small, led by Reno, which is a destination for some people who left Los Angeles.
The 10 Markets Where the Most People Paid Cash for Houses
|Market||Paid in Cash|
|Greenville, South Carolina||38%|
|Claremont, New Hampshire||33%|
|El Paso, Texas||15%|