Cash Buyers Saturating Some Real Estate Markets
Do you have some cash to invest? You’re not alone if you invest in the housing market. However, opportunities to grab a great deal with that cash are starting to fade – in some cities.
Real estate firm Zillow says that, as home values fell after the peak in 2007, many investors entered the market and purchased lower priced homes with all cash. Seven years later, those investors are beginning to leave the hottest markets for investment properties in the Midwest.
More than half of the sales in the first quarter of 2014 were all cash in Detroit, Cleveland and Cincinnati. Even though cities like Detroit are experiencing severe difficulties with local government services, home values in these metros are rising slowly, and price to income ratios are at or near historically low levels. Housing, states Zillow, remains a good investment for cash-rich buyers in these markets. Most are seeking rental properties that can later be sold for a tidy profit when the market turns around.
In Philadelphia, 33 percent of individual buyers purchased their homes during the first quarter of this year with cash. Eighty-eight percent of investors paid cash during the same time period. Out of all buyers, forty percent paid for homes in cash.
Comparatively, out of all buyers in Detroit, 53 percent used cash to buy homes. Ninety-four percent of all investors used cash while 43 percent of individual buyers plopped down greenbacks. Cleveland and Cincinnati had similar percentages.
Florida, however, is the hottest market right now for cash buyers. Sixty-five percent of all buyers used cash in Miami. In Tampa, that number was 57 percent. In Orlando and Jacksonville, percentages were 51 and 50 respectively.
If you don’t have cash, don’t fret. Mortgage rates are still low and, as investor-driven activity slows down in various markets, more traditional buyers can re-enter the market without competing against cash buyers.