We’re 10 days into the new year, and although November seems like hundreds of miles away in our rear-view mirrors, it’s actually not. There is also an interesting trend going on all over the country and reflected in our transactions as well – all-cash buyers.
First let’s look at the November sales numbers:
Single-family home closings in Manatee County were up 7.5 percent. The median sales price, half above and half below, was $289,000, up 3.6 percent from November of last year. The average sale price was $362,338, up 7.2 percent from last year. The median time to sell was 93 days, which was up from last year by 5.7 percent, and the month’s supply of properties was 4.3 percent, which has been a relatively stable number for many months. The all-cash transactions were up an impressive 25.4 percent, representing 153 sales during the month.
Condo sales also were up in all areas, with closed sales up 16.3 percent compared to November of last year. The median sales price was $181,250, up 12.9 percent, and the average sale price was $222,561, up 15.5 percent. Median time to sell was 95 days, up 20.3 percent from last year. Month’s supply of properties was the same as single family at 4.3 percent, again a very consistent number. The all-cash sales were up 8.3 percent, representing 106 closed sales. Sales statistics are from the Realtor Association of Sarasota and Manatee.
As you can see, the all-cash transactions are up for both single family and condos, which is also a national trend according to Attom Data Solutions, a data provider. It reports that 28.8 percent of U.S. home sales during 2017 have been all-cash transactions. This is slightly higher than 2016 which was 28.6 percent. The typical norm for all-cash transactions, which was common in the early 2000s, was 20 percent.
With the economy doing well and mortgage credit readily available at still excellent rates, why are all-cash transactions so prevalent? Economists really don’t have an answer as to why buyers want to tie up so much cash in a home purchase. But cash deals are very attractive to sellers because they don’t need to wait for a bank to process a mortgage, resulting in faster closings.
There is a lot of cash floating around the country, not only from investors and wealthy buyers with deep pockets, but also from baby boomers downsizing. It’s not uncommon for people to move from pricey markets to less expensive ones, especially ones in states like Florida with tax advantages.
Some of the cash buyers also represent first-time buyers, who are using cash that has been gifted to them from their parents. But what about first-time buyers who don’t have the cash and are attempting to buy their first home and require a mortgage? Many of these buyers are losing homes to all-cash buyers, creating a whole new problem in the marketplace. First-time buyers generally drive the market and are the building blocks of the next generation of home owners, and if they can’t get in, it will eventually affect the general market.
It’s not uncommon for buyers to offer an all-cash deal only to then, after closing, apply for a mortgage. Mortgage lenders are starting to recognize this and are offering first-time buyers a product to convert their all-cash purchase to a mortgage right after closing, but they still need the cash to begin with.
Let’s hope the new year will continue our positive real estate trend whether they be financed or all-cash. Good luck with your real estate transactions in 2018.