by Mike Colpitts 
- Cash is king in real estate.
- Almost one-in-three homes sold in the U.S. were purchased in cash, according to a new report from Realtor.com.
- Cash buyers range from equity rich homeowners to first time investors, wielding a strong hold on the housing market.
In more affluent areas, cash buyers control an even stronger hold on the market. Nationwide 32.8% of home sales during the first half of the year were all cash transactions. Cash buyers surged during the pandemic and then tapered back following the transition back to regular times.
Miami (43.0%) led metro areas for cash buyers, while San Antonio (39.6%) placed a strong second place in the survey, followed by Kansas City, Kan. (39.2%), Birmingham, Ala. (38.8%), Houston (38.8%) and St. Louis (38.1%).
“Cash buyers have long been a fixture in the market, but their influence is more pronounced today than in pre-pandemic years,” said Danielle Hale, chief economist at Realtor.com. “High-wealth buyers, investors, and those with significant equity can move quickly and often win out in competitive situations. For traditional, mortgage-reliant buyers, this can add another hurdle in an already challenging affordability environment.”
Some 40% of homes priced over $1-million were purchased in cash, while a whopping 50% above $2-million were cash deals. Cash is king. It seems the higher the price, the more likely the home is to be bought in cash.
Lower priced homes are more likely to be sold with financing. Two-thirds of home sales under $100,000, which are hard to find in many areas of the country were bought with cash.
Older households and buyers with significant equity are more likely to purchase without a mortgage, often using proceeds from a prior home sale as cash is king in real estate. High net worth wealthy buyers are less influenced by borrowing costs and more likely to pay in cash.
The prevalence of cash buyers varies greatly across the country, driven by buyer demographics, and local market dynamics. A hodgepodge of states with and without wealthy concentrations make up the strongest areas of cash home sales.
Mississippi (49.6%), Montana (46.0%), Idaho (45.0%), Hawaii (44.9%) and Maine (44.4%) topped the list for all-cash sales during the first half of the year. In Mississippi, the high share of cash sales reflects the state’s lower home prices and limited access to credit. However, Hawaii and Maine attract affluent second-home buyers, many of them older and equity-rich.
Montana and Idaho have seen elevated levels of all cash buyers, with an increasing share of second home buyers.
High-cost, job-centered metro markets like Seattle (17.9%), San Jose (20.6%), Denver (20.7%) and Washington, D.C. (21.5%) saw the lowest numbers of cash purchasers.