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Cities Where Buyers Still Paying with Cash

By Allison Halliday | September 22, 2014

According to an article in 24/7 Wall St, nearly 38% of condos and homes purchased during the second quarter of the year were all-cash sales. This is slightly higher than a year earlier, but is lower than figures for the previous quarter, where sales reached a three-year high of 42%.

The proportion of all-cash sales varied considerably throughout the country. While in the Miami Metro area more than 64% of sales were all-cash deals, this figure was only 18.5% for Madison, Wisconsin. Data from RealtyTrac shows exactly where homebuyers have been paying with cash, and these buyers tend to fall into three categories. The first are institutional investors buying property for rental, while the second are international investors who view property in the US as being a safe haven, and the third group is made up of retirees who are often able to pay cash.

© StepStock -

© StepStock -

The high levels of all-cash sales can at least be partially explained through increased activity from institutional investors. These are investors that who purchase at least 10 properties each year. Seven out of the top 10 cities with the highest number of all-cash sales were also in the top 20 cities for the highest percentage of institutional investors. All-cash sales also tend to be highest in areas with distressed housing markets, particularly in cities that were hard hit during the recession. Florida is a prime example, and all-cash sales accounted for most home sales. Out of the 10 cities with the most cash sales, eight are located in Florida.

Cash sales tended to account for lower priced homes, which is no surprise, but also for the most expensive properties. All-cash sales accounted for two thirds of homes sold for $100,000 or less, and for 45% of homes costing $2 million or more. Apparently while institutional investors tend to buy homes in the lower price brackets, international buyers typically purchase higher priced homes.

Cities where cash sales were highest include Las Vegas-Paradise metro areas where cash sales accounted for half of all transactions, and Palm Bay-Melbourne-Titusville, Florida where cash sales accounted for a similar percentage. In Jacksonville, Florida cash sales accounted for 51.5% of sales, and in McAllen-Edinburg-Mission, Texas, cash sales accounted for 52% of transactions. In Orlando-Kissimmee, Florida, cash sales accounted for 52.2% of sales, while in Lakeland, Florida this figure was 53%. In Tampa-St. Petersburg-Clearwater, Florida cash sales accounted for 54.6% of transactions, while in the Sarasota-Bradenton-Venice, Florida this figure was even higher at 61.5%. The top two cities for all-cash sales were Cape Coral-Fort Myers, Florida, and Miami-Fort Lauderdale-Pompano Beach, Florida where cash sales accounted for 62.1% and 64.1% of sales respectively.

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.
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