“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”
Warren Buffett said this in 1963 in an era when not everyone considered the bottom line the most important thing. Now, however, not only are the sale and the sale price the most important things, cash is also becoming one of the most important elements of a real estate transaction.
It’s true that real estate transactions go more smoothly when homebuyers are paying with all cash. Closing times are shorter, and there is less stress for both buyers and sellers waiting for the inevitable shoe to drop. Loan applications take longer than expected, the one last piece of documentation is not readily available and interest rates are going up, forcing a reevaluation of qualifications. But cash avoids a lot of those issues, making a cash buyer extremely attractive.
According to the National Association of Realtors Economist’s Outlook, the share of cash buyers dropped to just 21 percent in 2017. That compares with a national average of 31 percent between 2011 and 2013 and as high as 57 percent in Florida in 2012.
Well, Florida is still humming with cash buyers, at least in our area. The July sales statistics for single family homes bought with all cash was up 22.7 percent from last July and for condos up 17.5 percent from last July. For the month of August, however, the cash buyers were off for single family homes down 8.1 percent but for condos they were up 20.8 percent.
And in an interesting article I recently read, Detroit is finally digging out of their deep depression and starting to sell real estate. The median home price as of this writing in Detroit is $32,428, the medial home price nationwide is $234,000. The percentage of homes bought in Detroit for cash as of this writing was 87 percent and nationwide was 28 percent. Obviously, the historic low prices in Detroit is generating all cash offers many from investors and flippers. Flippers may be just what Detroit needs where many homes have permit issues and condition problems preventing buyers from applying for a conventional mortgage.
But let’s see what’s happening in Manatee County for the month of August: Closings were up for both single family (0.2 percent) and for condos (26.9 percent). The single family median sale price was $296,000, up 3.2 percent from last August, and the condo median was $190,000, up 3.8 percent. The average single family sold for $393,126, up 4 percent, and the average for condos was $222,249, up 2.8 percent. The median time to sell for single family was 94 days and for condos 93 days, and the months’ supply of single-family homes was 3.9 percent and for condos, only 3.6 percent.
Nationally, the number of sales is holding steady, down just 1.5 percent for August, prompting Lawrence Yun from the National Board of Realtors to comment that the housing market is heading to an equilibrium, more good news for the economy. The August median national single-family sales price was $264,800, with a 4.3 monthly supply of properties.
Essentially what we have here is good news for Manatee County and the country generally, with some regions doing better than others, and inventory is still down all over, pushing selling prices up. In Manatee County, not only is cash king but condos are also king, with soaring sales and prices.
Everyone loves cash and always will, but don’t let it scare you away from jumping into the pool. You can avoid the sharks by keeping your credit clean and saving your pennies, so you’ll look as good as king cash.