Without cash transactions initiated by investors, Cook County, the seat of Chicago, would be facing an even bleaker home sales situation today, the Institute for Housing Studies at DePaul University concluded in a new report.
Between the years 2005 and 2011, all-cash home sales in Chicago rose by 12% while home finance deals fell by 76%.
Last year alone, 45% of the residential property sales in Cook County were finalized through a cash sale. Comparatively, only 15% of sales in 2005 were cash purchases, the IHS study said.
Areas with heavy doses of foreclosure activity saw the most cash transactions, with nearly 70% of cash sales occurring in high-foreclosure Chicago areas in 2011. That compares to 30% of the cash sales occurring in neighborhoods with low foreclosure rates.
"The weak economic recovery and difficulty accessing mortgage credit are keeping many potential home buyers out of the market," said Geoff Smith, executive director at the Institute for Housing Studies. "But low prices and a demand for rental housing are enticements to buyers and investors who have access to cash to purchase properties."
Most of the two-to-four unit buildings acquired within Cook County were acquired with cash last year. The reason behind this is the fact that smaller-unit multifamily buildings have a harder time obtaining financing. These buildings make up 33% of the county's rental stock and provide 276,000 units for lower income communities.