Share of All-Cash Home Purchases Falls in Most Areas

Share of cash sales highest in Florida and Midwest Metros; Lowest percentage of cash sales clustered in West, Mid-Atlantic Metros, According to Zillow Analysis
- The share of cash buyers fell year-over-year in the first quarter in 102 of 126 metro areas analyzed by Zillow.
- In 27 of the top 30 metros, more than one third of all sales of the lowest-priced homes were made with cash.

PR Newswire

SEATTLE, June 19, 2014 /PRNewswire/ -- The portion of home purchases made with all cash fell in the first quarter compared to a year ago in a majority of metro areas nationwide, as investor-driven activity fades and more traditional buyers re-enter the market, according to a Zillow analysis. Homes priced in the lowest-third of all homes available are most attractive to cash buyers.

The share of cash buyers fell year-over-year in 102 of the 126 total metro areas analyzed by Zillow. Among the top 30 largest metros, the share of cash buyers was highest in the first quarter in Miami (64.9 percent), Tampa (57.1 percent) and Cleveland (54.2 percent). Large metros with the lowest share of all-cash sales in the first quarter were Virginia Beach (17.4 percent), Denver (22.4 percent) and Portland (22.9 percent).

Zillow also examined the share of cash sales made in the bottom, middle and top one-third of home values, and the portion of sales made by individual buyers and business buyersi in each market. In 27 of the top 30 metros, more than one third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros – Tampa, Detroit and Miami – more than 80 percent of all sales in the lowest price bracket were cash deals.

"Even as the share of all-cash sales falls in many areas, it's pretty clear that cash is still king, especially at the lower end of the market," said Zillow Chief Economist Dr. Stan Humphries. "It can be difficult for more traditional buyers to compete with cash offers, especially in a tight inventory environment and among cash-strapped first-time buyers most likely to seek lower-priced properties. Housing is much more than an investment for most buyers, and it's heartening to see more buyers armed with traditional financing begin to enter the market. This is a critical step on the way back to a more normal, balanced housing market."

Individual, non-business buyers were more likely to buy bottom-tier homes with cash in the first quarter – in 20 out of the top 30 metros, the portion of sales that were all cash in the bottom tier was more than double that in top-tier homes. Business buyers, on average, were more likely to pay all cash in home purchases than individual buyers. In 11 of the top 30 metros, more than 90 percent of homes purchased by business buyers in the bottom price tier were all cash.

Metro

Current % of Cash Sales (2014 Q1)

Peak Cash Sale %ii

Peak Quarter

% of Sales in Bottom Price Tier that were all Cash

% of Sales in Middle Price Tier that were all Cash

% of Sales in Top Price Tier that were all Cash

Los Angeles, CA

30.9

35.9

2012 Q4

36.1

24.1

31.3

Chicago, IL

40.9

45.9

2013 Q1

63.3

27.9

21.6

Philadelphia, PA

39.9

44.6

2013 Q1

67.4

24.4

19.9

Miami-Fort Lauderdale, FL

64.9

71.2

2012 Q1

84.7

51.9

49.8

Boston, MA

28.3

34.4

2005 Q1

36.5

19.7

25.5

San Francisco, CA

28.1

35.6

2010 Q1

35.6

19.3

26.8

Detroit, MI

53.2

69.5

2011 Q4

83.2

34.9

25.0

Riverside, CA

39.4

47.0

2013 Q1

53.0

30.0

32.7

Phoenix, AZ

37.0

57.2

2011 Q1

50.9

28.0

29.7

Seattle, WA

25.9

31.0

2013 Q1

35.7

16.1

22.2

San Diego, CA

30.1

38.6

2011 Q1

39.5

19.2

28.2

Tampa, FL

57.1

60.3

2013 Q1

81.4

42.4

31.5

Denver, CO

22.4

28.2

2007 Q3

35.4

14.2

18.8

Pittsburgh, PA

40.1

54.8

2012 Q1

64.4

25.2

19.4

Portland, OR

22.9

33.4

2010 Q3

33.1

17.7

15.8

Sacramento, CA

34.5

42.0

2012 Q1

46.1

21.4

35.2

Orlando, FL

50.6

61.5

2011 Q1

78.0

38.4

30.1

Cincinnati, OH

51.4

51.4

2014 Q1

66.1

37.1

42.1

Cleveland, OH

54.2

60.5

2013 Q1

74.7

34.1

35.9

San Jose, CA

23.4

31.2

2012 Q1

29.3

16.8

23.1

Columbus, OH

38.2

53.2

2008 Q4

62.9

26.9

19.7

Charlotte, NC

36.2

45.3

2012 Q4

64.1

28.7

19.9

Virginia Beach, VA

17.4

67.8

2013 Q1

28.4

7.4

13.8

Nashville, TN

35.2

40.6

2011 Q1

54.5

21.7

27.3

Milwaukee, WI

40.8

50.0

2012 Q1

61.3

22.4

22.6

Jacksonville, FL

49.8

52.9

2013 Q1

76.8

36.1

26.1

Memphis, TN

49.8

60.0

2012 Q4

77.5

42.6

21.4

Richmond, VA

27.4

55.9

2013 Q1

51.6

17.1

12.0

Raleigh, NC

28.7

34.3

2013 Q1

45.4

22.2

17.8

Tucson, AZ

40.1

51.1

2013 Q1

55.2

30.3

31.0

About Zillow:
Zillow, Inc. (NASDAQ:Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage MarketplaceZillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and StreetEasy®. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads is a trademark of Zillow, Inc.

i Business buyers were defined as those purchasing under an LLC, LTD, LLP, Partner, Company or Corporation designation.
ii Since the first quarter of 2005.

 

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