More than four out of ten residential home purchases in the first quarter of 2014 were all-cash. That’s according to real estate data firm RealtyTrac. All-cash deals made up 42.7% of all purchases, that’s up from 37.8% in the previous quarter and 19.1% from Q1 of 2013.
According to the report, the top five markets for all-cash sales were all in Florida: Miami, Sarasota, Palm Bay and Lakeland which all had more than 60% of home sales as cash purchases; in the Cape Coral-Fort Myers area, more than 73.6% of purchases were all-cash. New York, Atlanta and Las Vegas were other cities in which more than half of their home purchases were all-cash.
Yahoo Senior Columnist Michael Santoli spoke with Lauren Lyster about what the rise in all-cash sales means for the broader housing market. He said it shows strength in sales for those who just sold a home and are using the proceeds to buy another home. But Santoli doesn’t think the news is as good for first-time buyers. “What it does show a relative absence of first time buyers and available credit for those first time buyers, because those folks virtually never pay cash.”
So, while it may show strength in investor demand, Santoli said the increase in all-cash purchases shows an impaired market. “I definitely think you have to put it in the column of being a risk for the strength of the economy this year, and not an asset,” he said.