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Cash Buyers Nearly 30% of All February Twin Cities Home Sales

February 2011 saw a new record for the percentage of homes sold to cash buyers: a whopping 28.3% of all homes that closed in the month were purchased with cash.  Further, it also represents the largest number of units sold to cash buyers for the month of February: 624 homes sold in February 2011 to cash buyers, versus 514 homes during the same time last year and 438 in February 2009.

While some people complain about cash buyers (the majority are investors buying for rental or rehab & resale) competing with owner-occupant buyers using financing, the truth of the matter is that we’d be in a world of hurt without those cash buyers since housing supply would be far higher and would put even more pressure on prices.

The fact that so many cash buyers are in the market right now I believe is a very positive sign: cash buyers are making a 100% bet with their money that house prices are stabilizing – if prices were to drop substantially they have no ability to “walk away” because all their money is tied up in the house!

The charts below all explain the same data, just in different presentations to try and give you better context.

 

“4-Up” Version for easy printing (click image for PDF):

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2 comments
Aaron Dickinson
Aaron Dickinson

I agree Eric. Though I can't put a number on it, my guess is about 60% - 70% of cash buyers are investors though. As homeownership rates fall from their peaks, investors can and must play a bigger role in our housing market.

Eric Myers
Eric Myers

It always bothers me when people jump to conclusions about cash buyers only being investors. First off, that's not always true. There are any number of reasons for cash buyers beyond just the purposes of an investor. Oh and by the way, what's wrong with an investor anyway? Do cities honestly prefer vacant properties to occupied properties? I think not since one is on the property tax rolls and one is not.

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This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.