Thursday, May 8, 2014

43% of homes sales this year have been cash purchases

Nearly half of all home sales this year have been paid for in cash.
All-cash deals hit a record 43% of home sales during the first three months of 2014, according to RealtyTrac. That's up from 19% a year earlier and the highest level reported since RealtyTrac began tracking the deals in early 2011.
Interestingly, the increase in cash sales is occurring despite a downturn in purchases by institutional investors -- firms that have been active in buying foreclosures and short sales with cash.  
"As institutional investors pull back, there is still strong demand from other cash buyers -- including individual investors, second-home buyers and even owner-occupant buyers -- to fill the vacuum," said Blomquist.  
Cash buyers paid an average of $207,668 for homes during the first quarter, a 13% discount to the properties' average estimated value, according to RealtyTrac.
So almost half of home sales have been cash, and on average, that was over $200,000 in cash?  Is this an amazing recovery, or what?!? 

Errr..  Or what.  In fact this very likely means that foreigners with money are buying up houses as investments.
Wealthy Chinese with a few million yuan to burn will spend billions on U.S. real estate in the years ahead, according to a report released Wednesday by CB Richard Ellis, a large global real estate firm. 
The United States is the country of choice for China buyers.  Canada and Australia come in next at No. 2 and No. 3 respectively. That rich Chinese individuals and savvy corporations are buying up real estate in world class cities is no surprise at this point. 
News of new Chinese real estate deals are popping up every quarter.  Similar moves happened with the Japanese back in the 1980s. Now it’s China’s turn. And by most estimates, they are snatching up high end real estate in Los Angeles, San Francisco and New York, in particular. In California, China is the third largest foreign buyer of real estate, following Mexico and people from the Philippines, according to
USA today ran an article on the topic last month.
International homebuyers are attracted to the United States for a number of reasons. These include favorable housing prices, good weather, the country's relative economic stability and an attraction to America in general. As the housing market improved and home prices rebounded, the interest of foreign buyers in U.S. properties has soared. 
Interest in U.S. property increased dramatically in a number of countries between 2009 and 2013. In all, interest in home buying, according to housing market firm RealtyTrac, increased by 95% or more in 10 countries, and at least doubled in nine of these nations. Interest in U.S. property by residents of the United Arab Emirates rose 352%, the most out of any country. Based on subscription data provided by RealtyTrac, these are the 10 countries where interest in buying American homes is on the rise. 
Overseas buyers likely see value in the U.S. housing market. In an interview with 24/7 Wall St., Daren Blomquist, vice president of RealtyTrac, said, "The U.S. real estate market is coming off of a rough patch and entering recovery mode. And so international buyers see it as a great time to jump in and catch the U.S. market on the upswing."  
According to the Case-Shiller 20-City Composite Home Price Index, the U.S. housing market is just beginning to rebound from its lows set in March 2012.

1 comment:

  1. I'm in Australia and can vouch for the high volume of investment seminars trying to sell real estate trips to the USA. Sounds good and well, but I've been too concerned with the way the US government is going to risk putting down hundreds of thousands of dollars to then be taxed into oblivion as a foreign investor.