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As the saying goes, cash is king. And that’s especially true in today’s pandemic-fueled thrill ride of a real estate market, where homes can sell in days—or even hours—and usually after multiple offers.
In this Wild West environment, buyers are doing anything they can to stand out. And more and more, all-cash offers do just that, and can mean the difference between getting that dream home—or winding up empty-handed. Again.
The percentage of home sales made in cash rose about 5% in the first two months of this year compared with the same period last year in the 300 largest metropolitan areas, according to Realtor.com® analysis of sales data from CoreLogic, a real estate analytics firm. All-cash deals make up 20% of sales over this period.
With more people forgoing mortgages to gain an edge, our data team decided to take a look at which metros have seen the biggest growth in cash purchases so far this year. We found that all-cash offers were up in places with (relatively) affordable homes outside of bigger cities; in vacation spots; and in regions where competition has become exceptionally fierce.
“If you have to compete with other potential buyers, an all-cash offer puts you in a more competitive spot,” explains Danielle Hale, chief economist at Realtor.com. It “can make you a more attractive buyer.”
Cash offers can be catnip to sellers during this frenetic real estate period because there’s less risk the deal will fall through if a home doesn’t appraise at these new-normal, higher prices. These transactions are also completed faster: Cash sales can take just a couple of weeks to close, while working with a mortgage lender can sometimes take well over a month. If a house is vacant and the owners are paying for it, that’s another big incentive to accept a cash offer.
To be clear: Most people in America still use a mortgage to buy a house. Cash buyers are typically real estate investors, people looking for second homes, or international purchasers. Older buyers are also more likely to pay in cash since they can take their money from selling a previous home and put it into a new one.
To come up with our list, we dove into the CoreLogic data to see which metros recorded the biggest jump in cash sales in January and February of this year, compared with January and February of 2020—aka the pre-pandemic days. For geographic diversity, we limited the rankings to one metro per state. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
So where does cash really rule? Let’s take a look.
Tony Frenzel for Realtor.com
1. Reno, NV
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Median list price in April: $524,500
Share of cash sales in January and February: 51%
Difference from last year: 29%
Known as the “Biggest Little City in the World,” Reno was recently named one of this year’s top emerging real estate markets due to strong housing demand and limited housing supply.
Once more of a haven for snowbirds and retirees, Reno has attracted tech workers who are less tethered to their offices who have been making the move en masse in the past year or so.
“Most of our large cash buyers are coming from California,” says Erika Lamb, a real estate broker with Welcome Home Reno Real Estate & Property Management.
Prices are going up, but homes here are still considerably less expensive than what buyers would get in the San Francisco Bay Area. They also often offer more room to spread out.
Reno’s also a 3.5-hour drive to San Francisco, so it’s not too far of a move for people who want to make weekend trips to the coast.
Homes here move quickly though. In April, homes were on the market for just 15 days. (To put that in perspective, nationally, the typical home spent 43 days on the market in April.)
2. Racine, WI
Median list price in April: $289,200
Share of cash sales in January and February: 40%
Difference from last year: 18%
Set along Lake Michigan, Racine offers an affordable alternative to other metros in Wisconsin. It’s also just a 40-minute drive to Milwaukee for folks who want to go into the office. (Sometimes, anyway.)
Cash buyers have been growing more common in Racine for a few years now, says Kimberly Mann, a real estate agent and team leader for TAMT Homes at Shorewest Realtors.
To make room for a new manufacturing facility, the state bought out many homeowners and landowners, paying them in cash to move out. Some buyers have been using those payouts to buy new homes.
Recently, though, Mann says most cash buyers she’s working with are baby boomers looking to downsize. Helped by retirement bonuses and equity from the sale of their larger, family homes, some boomers are buying condos to live in part time, while also buying second properties in the country or warmer places like Tennessee and Arizona.
While some investors are being lured by the city’s booming economy, others are turned off by the rapidly escalating price tags.
“Rising prices are pricing out investors on cash deals,” Mann says. “Owner-occupants (people planning on living in the home once they buy it) are willing to spend more. It’s not purely a numbers thing.”
3. Greenville, SC
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Median list price in April: $323,950
Share of cash sales in January and February: 38%
Difference from last year: 14%
Nestled in the foothills of the Blue Ridge Mountains, the small city of Greenville is another city that has seen major growth in the past few years. An average of 19 people moved to Greenville County per day in 2019, according to the Greenville Area Development Corporation—and that was prior to things escalating during the COVID-19 pandemic.
Employment is booming here, as many major employers have opened operations in the upstate area over the past few decades. Buyers are also enticed by moderately priced homes, low taxes, and balmy weather. (Its plentiful restaurants, museums, and beautiful scenery don’t hurt either.) This has brought in plenty of professionals and young families, bidding up real estate prices.
Greenville has also become a destination for retirees, thanks to low taxes for seniors. Those looking to downsize are able to put what they earned from their previous home sale into their dream retirement spot.
4. El Paso, TX
Median list price in April: $240,925
Share of cash sales in January and February: 15%
Difference from last year: 13%
This border town was already considered an up-and-coming market in 2019, as buyers from Arizona and California were enticed by its affordability.
Competition may be fierce, but the low cost of living and the state’s lack of income tax are still bringing in buyers from out of state, especially people who can now work from anywhere, says Yajaira Lopez, a real estate agent at Home Pros Real Estate Group.
Many of these folks can afford to put in cash offers on the metro’s lower-priced real estate. (The median home list price nationally is $375,000—about $130,000 more than El Paso, according to Realtor.com data.)
“They’re going to still work [at their previous jobs] and make the same amount of money, but they want to move to an area where the cost of living is lower,” Lopez says.
Investors are also coming into the area, but they’re focusing on lower-priced, single-family homes they can rent out.
5. Clarksville, TN
Median list price in April: $322,650
Share of cash sales in January and February: 30%
Difference from last year: 12%
As the fifth-largest city in Tennessee, Clarksville has seen some exponential growth in the past decade. Its population grew 19% from 2010 to 2019, according to U.S. Census data. New employers, including Amazon and Microvast, an electric vehicle battery maker, are bringing in lots of folks with good jobs in need of housing.
About an hour north of Nashville, this secondary market is, like others on this list, a good option for people looking to save some money, especially if they don’t have to go into the office every day. Fortune magazine recently named Clarksville one of the best places to invest in real estate during the pandemic
6. Torrington, CT
Median list price in April: $425,000
Share of cash sales in January and February: 41%
Difference from last year: 11%
Forty minutes west of Connecticut’s capital, the Torrington metro area (which includes Litchfield County) is a popular celebrity haven—Meryl Streep, Mia Farrow, and Seth Meyers all have homes there. And it has seen a surge of cash sales recently, according to Sandy Fine of Berkshire Hathaway HomeServices New England Properties.
“I’m absolutely amazed at the number of cash buyers we’re seeing, but it’s all over and at different price points,” Fine says.
At the beginning of the pandemic, Fine says a lot of cash buyers were coming from more expensive places like New York and California and were able to pay more upfront. Those buyers were mostly looking to get out of cities and into rural and suburban areas to remain socially distant. Nowadays, some buyers are buying lake homes ahead of summer, and since people usually buy vacation homes in cash, that may be another reason cash sales are up.
Overall though, Fine says buyers may be more inclined to put in a cash offer because the market there is so competitive, and there are so few homes on the market.
7. Kahului, HI
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Median home price in April: $891,500
Share of cash sales in January and February: 40%
Difference from last year: 11%
Buyers have been snatching up properties in Hawaii during the pandemic, enticed by island living and a slower pace of life. Kahului, on the island of Maui, is a tropical paradise come to life, with breathtaking views of the Pacific Ocean.
Typically, cash sales are more common on higher-priced homes. High demand, a competitive market, and buyers with means are just a few reasons cash sales have grown here this year.
Despite travel restrictions, international buyers have continued to be interested in buying in Kahului, based on Realtor.com search activity earlier this year. Meanwhile, Americans from out of state, especially on the West Coast, are snatching up properties, sometimes sight unseen.
8. Canton, OH
Median home price in April: $186,900
Share of cash sales in January and February: 40%
Difference from last year: 11%
Pre-pandemic, Canton made the list of our 20 hottest housing markets thanks to its affordability. With a median listing price about half the national median of $375,000, Canton is the most budget-friendly metro on our list.
It’s also a good place for investors who want to turn single-family homes into rentals.
Joey Marino with Whipple Auction and Realty has worked with buyers from all over the country, including Las Vegas, the Carolinas, and New York, who are looking to purchase investment properties here.
“The rents are not near as high as what you would get in New York City, but the return on investment can still get you 1% or more monthly,” Marino says.
Marino says local investors have slowed down on buying up properties as prices here have risen.
“They see the prices coming up, but the people who are out of state seem to be OK with the pricing as is,” he says.
9. Claremont, NH
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Median home price in April: $327,000
Share of cash sales in January and February: 33%
Difference from last year: 10%
Claremont, located on the border of Vermont, is considered a suburb of Boston. (Though the 1.5-hour commute may be a bit of a grind for people heading into the city every day.) The housing market has become very competitive here lately, as Boston buyers expand their search radius to find more affordable homes.
Finding cheaper alternatives to Boston—one of the least affordable housing markets in the country—is not a problem here, and buyers who can use money from a previous sale to pay in cash will have the advantage.
Claremont’s idyllic downtown is made up of older Greek and Italian Renaissance Revival buildings, while its location along the Connecticut River allows plenty of opportunities for kayaking and fishing. Claremont is a vacation spot for skiers, snowshoers, snowboarders, and ice skaters in the winter.
10. Bellingham, WA
Median home price in April: $499,450
Share of cash sales in January and February: 33%
Difference from last year: 9%
Bellingham is another popular market for second homes, with a walkable port town filled with mom and pop shops and boutiques. Deep-pocketed buyers from Vancouver, British Columbia, and Seattle have typically come here to buy vacation homes on the waterfront or cabins in the woods near ski slopes.
It’s the kind of place people go to get away and take in the fresh air—and that hasn’t gone unnoticed during the pandemic. Since last year, buyers from large cities have been descending on Bellingham to live full time.
“We’re seeing a lot of folks move up from Seattle, selling homes there for a million-plus, and then coming down here and buying a new place with cash,” says real estate agent Paulina Antczak, with Brandon Nelson Partners.
The post Money Talks in These 10 Metros Where All-Cash Buyers Are Scooping Up Homes appeared first on Real Estate News & Insights | realtor.com®.
source https://www.realtor.com/news/trends/money-talks-ten-metros-where-people-are-buying-more-homes-in-cash/
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