Cash Sales Are 60% Of Low Priced Homes Transactions.
According to a recently released report from Black Knight Financial Services in Jacksonville Florida cash sales account for over 60% of low priced homes. While cash sales have decline from 37% to 35% they still remain strong. As of the end of April 2016 cash sales reached 62% of all low priced home sales. The 62% is for the bottom 20% of home values, while cash tranactions represented only 30% of the top 20% of home values. Ben Graboske, Data & Analytic Senior Vice President of Black Knight Financial Services said that “there is a big disparity between high and low end markets nationwide in this regard.”
“As the inventory of distresses properties has dried up nationwide the overall share of cash sales has been on the decline as well” said Graboske. From a peak of 45% of all real estate transactions back in first quarter of 2011, cash sales accounted for just 35% of home purchases in the 1st quarter of 2016″.
Cash sales for the bottom end of the market can be attributed to two factors. First homes at the lower end have a higher negative equity than the higher priced properties offering more of a discount to buyers. Secondly lower priced homes simply require less cash to purchase properties, making cash sale possible to more people.
RealtyTrac recently released some data that showed 6.6% of total family homes and condo’s in the 1st quarter of 2016 were flipped. Home flippers purchased 71% of the se homes with cash.
Some Highlights of this report are:
- Borrowers with low fixed interest rates are less likly to list house for sale, ARM borrowers are 72% more likely to list property for sale.
- Cash sales make up 62% of purchases in the lowest 20 % of market value, but make up 30% of purchaes in the top 20% of market value.
- First quarter 2016 cash sales have declined from 37% in the 1st quarter to 35% now.
- Mortgage properties listed for sale down 22% from 2012, but up 10% among those current on loans.