The housing season has begun, and most of the sellers are demanding prices higher than the market value. Is this a great idea? In a way, yes and in a way, no. Sellers may just be able to get the price they want in this manner, but most of the buyers might not be able to get a mortgage if the house has been priced way higher than the market value. As per the stats, there are some buyers who still want these houses and are willing to pay the price in cold hard cash.
Considering the first quarter of the year 2014, almost 43% of all houses sold were all-cash deals. This is quite an impressive percentage, especially when you realize that all-cash deals comprised 19% in the first quarter of last year. As for the previous quarter, all cash deals took up around 38%. Among these deals, institutional investors which purchase at least 10 properties every year accounted for about 11% of the all-cash deals. Among the overall home sales, this is just equal to 5.6%.
The above stats represent the national housing market. Considering the regional markets, in some areas, all cash deals took up over 73.6% deals of all home sales. This is the highest value attained, followed by 67% and 65.1% in other areas.
A real estate agent told the press that lending standards have become strict and the inventory levels still have not risen enough. These two things have provided an edge to the investors and all cash buyers. Institutional investors may be pulling themselves out of the housing market across the nation, but there are still cash buyers in the form of second home buyers, individual investors and owner occupant buyers.
A recent study reveals that of all the cash deals, which were made in the month of March, 52% of them had a different mailing address. In light of this, an expert told us that different mailing addresses indicate a second home buyer of an institutional investor.
The stats indicate that the average price of all cash purchases was around $207,000 in the first quarter of this year. An estimate of $237,000 was predicted; the attained values are 13% below this.
A finance expert told the press that lending regulations are in favor of an all-cash buyer right now, which is why they have increased at both a local and national level.