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.