There a lot of data in this month’s housing numbers and I am still trying to digest it all. One of the more notable items however is that 27% of all closed sales in January 2011 were paid for in cash. Think about that for a minute: one out of every four homes was either bought by an investor or someone with deep pockets. For comparison, cash buyers made up only 4% – 5% (1 in 20) of sales in 2006 and 2007 but had risen to 22% (1 in 5) of sales by the 2nd half of 2010.
Cash buyers are often able to negotiatiate better prices on homes than financed offers since closings can occur sooner and there are no issues with financing approval or appraisal. This is especially true with bank owned homes since many banks will take a cash deal for less money versus a financed offer that could be for thousands more – they are looking for “surety of sale” and a quick close.
The good news is that these cash buyers are helping soak up our extra home inventory and their significant activity in this market suggests that the “smart money” people with deep pockets consider this housing market a good investment.
[...] does not compete with cash-in-hand private investors,” he wrote.”Read the MPR articleRead Aaron Dickinson’s original post breaking the storyIt will be very interesting to see how this development effects the market, nationally and locally, [...]