One-in-three May home sales was an all-cash deal
Cash continues to account for one-in-three local existing home sales that were listed on the local Multiple Listing Service. That’s down from the all sales share in 2011 through 2014. During that period court-house records show cash deals ranged from 60% to 40% of all existing home sales in the were cash deals.
According to the Northeast Tennessee Association of Realtors® (NETAR) May Home Sales Report, there were 212 cash deals last month that accounted for 33% of single-family existing home sales. That was the highest number for all-cash deals so far this year.
Most of the sellers who accepted cash sales also came off their asking price. That accounted for 120 (18%) of the cash sales. The largest discount was $142,000 on an $874,000 listing.
A little over half (50.1%) of last month’s existing home sales were discounted cash sales. The average discount was $11,900.
The smallest number of cash deals were from buyers who paid the list price. There were 36 of those cash deals that accounted for 5.5% of all cash sales.
Over list sales dropped to 29% of all sales last month and the average sellers ponied up an extra $6,744 to seal the deal. The total number of sales that were for more than the askings was 120. Of those, 59 (9%) were cash deals.
An analysis from the National Association of Home Builders found nationwide cash sales represented 11% of all transactions for new homes in the fourth quarter of last year. That was the highest since 1990 and the trend continues into this year.
The association says there are three reasons all-cash sales are up. In some ways, the trend also applies to existing home sales. A count of all-cash sales in the local new home market was not available.
- Cash sales are up for economic reasons. Higher mortgage rates have motivated anyone who got a lower-rate mortgage in the past to reconsider how they’ll finance a new purchase and paying interest rates that can be as much a twice the old mortgage isn’t an incentive to finance.
- All-cash deals increase in areas that are seeing a high demand for homes. The certainly applies to the local market. One reason for the number of cash deals declining from years past is the price of homes. The median sales price has made big gains since the pre-pandemic days, when there were more cash deals.
- The demographic shift is also at play. Although millennials are entering the market, today’s homebuyer is likely to be over 40 and have more means than the younger buyers. “They could be retirees using the existing equity of their home, real estate investors, or simply high-wealth individuals,” according to the association.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us