The article discusses the growing trend of US homebuyers opting for cash-only transactions instead of obtaining a mortgage, which is prevalent in specific regions such as big cities like Atlanta and Jacksonville. This trend is financially advantageous for affluent all-cash buyers, and the surge in US home values has led long-time homeowners to capitalize on this growth and relocate to more affordable areas.
The article discusses a recent trend in the US real estate market where an increasing number of homebuyers are opting for cash-only transactions instead of obtaining a mortgage. The trend is concentrated in specific regions such as big cities like Atlanta and Jacksonville, where nearly half of the transactions are handled mortgage-free. The article also highlights the prevalence of this trend in the New York City metro area and its impact on bidders who need the help of a bank to finance their purchase. The report suggests that affluent all-cash buyers are in a more financially advantageous situation, which gives good reason for the trend to continue. The surge in US home values has led long-time homeowners to capitalize on this growth and relocate to more affordable areas using the equity from the sale of their previous homes.
Recently released real estate data and analysis have indicated that an increasing number of homebuyers in the United States are opting for cash-only transactions instead of obtaining a mortgage. This trend has gained momentum in major cities like Atlanta, GA, and Jacksonville, FL, where mortgage-free deals account for 41% and 49% of total transactions, respectively.
The question arises as to whether this trend is also prevalent in the densely populated New York City metro area, where real estate prices are typically higher than the national average. According to the available data, cash-only transactions are, indeed, occurring in the area.
Chief economist at the National Association of Realtors, Lawrence Yun, commented on this recent trend, noting that the wealthy are primarily purchasing homes using all-cash transactions. This observation was made in response to data provided by realty company Redfin, which reported a sudden surge in cash sales.
Redfin's report outlined the percentage of all-cash home purchases in various US cities in 2022, compared to those made through mortgage loans such as FHA, VA, and conventional options. The report indicates that 31% of home sales in NYC were made using cash-only transactions.
The data suggests that those who are already wealthy, such as retirees, foreign buyers, investors, and high-net-worth individuals, are driving the trend by utilizing all-cash offers to avoid the rising interest rates associated with mortgage loans. This trend is not uniform across the country, but rather concentrated in specific regions.
Redfin's report notes that all-cash purchases are more financially advantageous than using mortgage loans due to the high interest rates currently prevalent in the market. While government-backed mortgages insured by the Federal Housing Administration (FHA) may be an option for buyers, affluent all-cash buyers still hold a distinct financial advantage. As a result, it is expected that the trend will continue.
Given the surge in US home values, long-time homeowners are capitalizing on this growth by relocating to more affordable areas using the equity from the sale of their previous homes. As such, the trend toward cash-only transactions is expected to persist.
Source: https://www.silive.com/business/2023/03/are-all-cash-buyers-dominating-nyc-real-estate-market.html
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