Cash continues to be king in the housing market, and it could become even more important. OSAKAWAYNE STUDIOS VIA GETTY IMAGES

Austin Business Journal writes, "increasingly, if you want to buy a home in America, you need to bring cash to the table.

Nationwide, all-cash purchases accounted for about 36.1% of total home sales in 2022. That’s the highest rate since 2013, according to ATTOM Data Solutions. In 2011 and 2012, coming off the Great Recession, cash sales were about 38.5%.

It's also up from 34.4% in 2021 and just 22.7% in 2020. And it’s likely to keep increasing, according to Rick Sharga, executive vice president of market intelligence at ATTOM.

“Cash buyers — many, but not all of whom are investors — are in a position of competitive advantage in today’s higher interest rate environment and will continue to account for a higher-than-usual share of market at least until mortgage rates dip back down a bit,” Sharga said in a release announcing the findings. “With affordability a problem for many buyers, especially first-time buyers, it wouldn’t be a surprise to see the percentage of cash purchases actually increase in 2023.”

Where cash is king

Many of the top markets for cash sales are located in the Sun Belt, in states like Georgia, South Carolina, Florida and Arizona — states that are benefiting from migration trends and have been seeing significant investor activity.

Out of the top 10 metro areas for cash sales as a percentage of all sales in 2022, six were in Georgia.

In Augusta, about 72.1% of home sales were in cash, up 17% over the 61.6% in 2021 — and more than double the 30.2% share in 2020. Columbus, Georgia, saw 69% of its sales in cash in 2022, while Athens, Georgia, saw 60.6% of its sales in cash. Gainesville, Georgia, fell just shy of 59% of its sales in cash.

A few cities in the Midwest also ranked highly.

Flint, Michigan, the only city in the top five that was not in Georgia, saw cash sales account for 59.5% of total sales in 2022, up from 57.6% in 2021 and 31.9% in 2020.

The cities where cash sales made up the lowest percentage of sales were more expensive coastal cities. Cash sales accounted for 17.8% of home sales in Washington, D.C., with Vallejo, California (18.8%) and San Jose (19.2%).

The price picture

The shift to cash came as the median home sale price increased about 10% in 2022, hitting an all-time annual high of $330,000.

Median home prices rose in all but two of the 157 metro areas tracked by ATTOM as part of the report. The five biggest year-over-year median price increases were all in Florida. Naples had the biggest single-year price increase at 26.9%.

Metros where prices dropped over the last year was Davenport, Iowa, which saw prices drop 2% and Shreveport, Louisiana, with prices down about 1.7%. Prices rose slightly in Baltimore, up about 2.7%, Pittsburgh, up about 2.7%, and Toledo, Ohio, up about 2.8%.

The ATTOM data shows that while home price appreciation is slowing due in part to higher mortgage interest rates from the Federal Reserve rate hikes designed to combat inflation, prices were still going up, albeit more slowly. The National Association of Realtors found in the fourth quarter of 2022 home prices rose about 4% compared to the same time in 2021.

“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” NAR Chief Economist Lawrence Yun said, noting these costs increases have far surpassed wage increases and consumer price inflation of 15% and 14%, respectively, since 2019. “Far fewer metro markets experienced double-digit price gains in the latest quarter.”

But don’t expect massive price drops either, Yun said. In fact, some signs point to buyers already coming back to the market.

“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” Yun added. “Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”"

 

Source: Austin Business Journal

Written by: Andy Medici

Published: February 22, 2023

 

 

Posted by Grossman & Jones Group on
Email Send a link to post via Email

Leave A Comment

e.g. yourwebsitename.com
Please note that your email address is kept private upon posting.