New Market Needs Traditional Buyers
Traditional buyers will not be persuaded by rising rates and home prices in this new market, says CoreLogic. Cash sales saved the market during the housing turn, which would have been much weaker with steeper price declines over the past few years without them.
Cash sales remained steady from 2000 to 2005, representing around 25% of all sales. The share of cash sales peaked above 40% two years ago when the real estate market crashed in 2007 and 2008. This jump is attributed to the rise in REO sales. For the past 19 straight months, cash sales have been declining gradually on a year-over-year basis.
Cash sales have provided a major boost to prices in certain markets. CoreLogic examined the cash sale trends among the 10 largest markets. According to the report, the theory that the hardest hit markets have the largest share or increase in cash sales is simply not true. For example, New York actually had the highest cash sales share at 53%, while hard-hit markets like Riverside in California held high shares that exceeded 40 percent.
Cash sales have begun to wane with investor activity. As a result, CoreLogic points to the need for traditional and first-time buyers to play a bigger role in housing to help the recovery move forward.