More wealthy consumers are closing with all-cash transactions, helping them to triumph in bidding wars.
Nearly one-third of U.S. home purchases this year have been made to cash buyers. That represents the largest share since 2014, according to a housing report from Redfin that tracked county records across the country from January 2001 through April 2021.
Remote work has allowed some homeowners to sell their homes in high-priced locales like San Francisco and then relocate to less expensive areas.
The pricey sales of their homes are allowing them to then pay cash for a new home.
Another factor: Investors are increasing their presence in the housing market. U.S. home purchases to investors or second-home buyers tend to account for the biggest bulk of cash sales. Investor home purchases comprised 17% of existing-home sales in May, up from 14% a year earlier.
All-cash sales accounted for 23% of transactions in May, according to the National Association of REALTORS®.
The growth of all-cash sales is making it difficult for first-time home buyers and lower-income home buyers to compete. About two-thirds of home offers written over the last month faced a bidding war, according to Redfin’s data.