Despite cash sales dropping in 102 of 126 metro areas in the first quarter of 2014 compared to a year ago, cash still rules the market, according to a recent Zillow report.
“Even as the share of all-cash sales falls in many areas, it’s pretty clear that cash is still king, especially at the lower end of the market,” said Zillow Chief Economist Stan Humphries.
“It can be difficult for more traditional buyers to compete with cash offers, especially in a tight inventory environment and among cash-strapped first-time buyers most likely to seek lower-priced properties,” Humphries said.
“Housing is much more than an investment for most buyers, and it’s heartening to see more buyers armed with traditional financing begin to enter the market. This is a critical step on the way back to a more normal, balanced housing market,” he added.
However, homes priced in the lowest third of all homes available are the most attractive to cash buyers.
In 27 of the top 30 metros, more than one third of all sales of the lowest-priced homes were made by cash.
Furthermore, in three of the top 10 metros – Tampa, Detroit and Miami – more than 80% of all sales in the lowest price bracket were cash deals.
As reported by HousingWire back in May, “Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, vice president at RealtyTrac.
Individual, non-business buyers were more likely to buy bottom-tier homes with cash in the first quarter – in 20 out of the top 30 metros, the portion of sales that were all cash in the bottom tier was more than double that in top-tier homes. Meanwhile, business buyers, on average, were more likely to pay all cash in home purchases than individual buyers. In 11 of the top 30 metros, more than 90 percent of homes purchased by business buyers in the bottom price tier were all cash.