Home purchases made with cash are on the decline across the country, according to Zillow , but cash sales still make up a significant portion of the lower-priced home market in many areas.
Cash sales declined year-over-year in the first quarter in 102 of the 126 metro areas Zillow observes . Zillow chalked up the decline to waning investor demand and a resurgence of traditional buyers in the market.
“[I]t’s heartening to see more buyers armed with traditional financing begin to enter the market,” said Stan Humphries, chief economist at Zillow. “This is a critical step on the way back to a more normal, balanced housing market.”
However, despite the recent trend, “it’s pretty clear that cash is still king, especially at the lower end of the market,” according to Humphries.
In fact, in the overwhelming majority of the top 30 metro areas—27 markets—Zillow found more than one third of home purchases in the lowest priced third of the market were made with cash.
Furthermore, in three of these markets, more than 80 percent of home purchases in the bottom segment were made with all cash. In Miami, 84.7 percent of low-priced home sales were cash deals. Detroit was close behind with 83.2 percent of low-priced home sales coming in as cash deals, while in Tampa, Florida, 81.4 percent of low-priced home purchases were made with cash.
Across the full price spectrum, the three metros ranking highest for proportion of cash deals in the first quarter were Miami (64.9 percent), Tampa (57.1 percent), and Cleveland (54.2 percent).
Among the top 30 metros, Virginia Beach (17.4 percent), Denver (22.4 percent), and Portland (22.9 percent) had the lowest percentage of cash sales in the first quarter, according to Zillow.
In most markets, cash purchasers heavily favored low-priced homes. In 20 of the top 30 metros, the percentage of cash purchases in the bottom third was at least twice that of the percentage of cash purchases in the top-priced segment.
One noticeable outlier, however, was Los Angeles, where cash purchases made up 36.1 percent of purchases in the bottom price category and 31.3 percent of purchases in the top price category.
Posted By Krista Franks Brock
Article printed from DSNews: http://dsnews.com
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This is probably one of the best quotes I’ve read in a long time, and it’s so apropos when it comes to entrepreneurship. As a real estate agent, I have witnessed this “grass is always greener” mentality for many years. I have witnessed countless mortgage brokers, title agents, and real estate agents hop from company to company looking for that “right fit”. When business doesn’t take off for them like a rocket at the new company, their instinct is to immediately start looking for a new place to go. After all, it has to be the company, right? It couldn’t possibly be a problem with their work ethic, marketing plan, or implementation, could it?
I have seen this same phenomenon at work with friends and family members who are always involved with the latest network marketing or MLM craze. From Amway to Mary Kay, Noni Juice to Creative Memories, there is always a new get rich quick scheme that is going to solve all of their financial problems. When the “pie-in-the-sky” promise doesn’t immediately come to fruition, they fall hook line and sinker for the next “opportunity” that comes along. I am always amused when I get the same pitch as I’ve heard so many times before about how this new endeavor is “different” and it is a “ground floor” opportunity. Boy, if I had a nickel for every time I….Oh well, I digress.
Now don’t get me wrong, I am in no way criticizing the MLM companies. I don’t doubt their success stories for a second. In fact, I embrace their success stories and wish more people would learn from them. I can guarantee you that those who have achieved great success in any business, whether real estate, network marketing, or something completely different, did so by focusing their attention 100% on the task at hand. Successful people purpose in their hearts to do whatever it takes to achieve their goals. Their gaze is so fixed on the reward in front of them that they don’t have time to even look at the grass on the other side of the fence, much less determine whether or not it’s greener.
The point of Maya Angelou’s statement is this; if the grass is greener on the other side of the fence, there is good reason for it. The individual on the other side of the fence didn’t just get lucky, but rather made a sacrifice to do the things that other, less successful people were unwilling to do. It may have come in the form of a higher water bill, the expense and labor of applying fertilizer, or perhaps researching books and online articles on creating the perfect lawn. Whatever the difference was, it was not simply the location alone that made the grass greener. It was better decisions, harder work, and an unwavering attention to detail.
Whenever you find yourself tempted to start looking for the next big opportunity, ask yourself if you’ve really given everything to the last big opportunity. You may find that with a few small changes and a fresh commitment to doing the right things, you may just find success (and a greener lawn) right where you are.
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Consumer’s expectations of U.S. economic conditions over the next year and the next five years rose. Perceptions as to whether it is a good time to buy big ticket items maintained a post-recession high of 94. The gain in confidence was more broad-based than in previous months.
“We appear to be gaining some traction among consumers here in Florida,” said Chris McCarty, the Survey Director. “The last time Florida consumers were this confident was over seven years ago in April 2007, prior to the recession, when the housing market was beginning to unravel. Prior to that the index peaked at 98 in January 2004. Overall we are quite a bit behind where we would typically be this far out from the end of a recession, but we had a lot further to go in this recovery.”
The employment situation has improved slightly in the Sunshine State, with unemployment declining .1 percent to 6.1 percent. Housing prices were up again in June to $185,000 for the median price of a single family home. There are some signs that housing gains may slow as both housing starts and sale of existing homes slowed in adjacent southern states. Economists are holding judgment until further data has been compiled to see if the decline part of a trend.
“Given the current trends here in Florida our expectation is that consumer sentiment will continue to rise slightly in the short run,” said McCarty. “While an index of 84 is not historically high, it does reflect a far more optimistic consumer than we have seen over the past year. Most of the potential effects of confidence are external to the state”.
“These include the inevitable rise in short term interest rates that the Federal Reserve will implement as early as this fall, the effect on consumers from escalation of conflict in the Middle East and Ukraine, and a significant correction in the stock market which is a topic of discussion among economic pundits.”
Posted By Derek Templeton
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Even though the first half of 2014 didn’t live up to the hope and hype, industry insiders are still calling for better days in the housing market for the rest of this year. On Friday, Redfin released its latest market summary, which sees the combination of sales, prices, foot traffic, and inventory as positive signs heading into the fall.
“After an abysmal first quarter that drove a disappointing first half, housing will be playing catch-up for the year,” said Nela Richardson, Redfin’s chief economist. “Though it won’t be a seamless transition, we believe the housing market is positioning itself for a stronger finish in the second half of the year.”
Granted, you may have heard the same kinds of optimism in January. The first quarter of 2014 was supposed to show a steady climb in all areas of housing, but hopes were battered by harsh winter weather, a drop in residential construction starts, and a shortage of qualified construction workers.
Things also were supposed to pick up in the second quarter—and they did, but only enough, by most accounts, to stanch the disappointing Q1 numbers.
But entering quarters three and four, Richardson is hanging her predictions on four key points.
First, home sales are catching up to 2013′s highs, which were the strongest since the recession. June sales (114,240) were only shy by 2.5 percent from last June’s, and sales were up year-over-year in eight of 30 metro markets, including Atlanta, Charlotte, and Oakland, each of which were up more than 8 percent, Richardson said.
Second, foot traffic is on the rise. According to Redfin, the number of customers going on tours with the company’s agents in June was up 27.1 percent from a year ago. “Tour growth is bucking seasonality trends, which tend to peak in May,” Richardson said.
Whether this trend will translate into stronger sales numbers hinges on whether mortgage supply from banks can meet the increase in demand or whether buyers with large amounts of cash on hand will continue to dominate the market, she said. Cash deals reached their peak in 2011 and have been declining steadily since, but the percentage of cash deals remains higher than the norm and is especially popular forlower-cost homes.
Third, price growth is becoming more sustainable. Even though the median sales price in urban markets topped $300,000 in June, price growth reached a two-year low of 6.4 percent, Richardson said. The stability is most welcome. “Prices over the past three years have been an expensive roller coaster for both buyers and sellers,” she said.
According to Redfin, the fluctuation between 2011 and 2012 was depreciation followed by double-digit growth, and price growth through 2013 averaged 14 percent. “In June, the median sales price grew at half that rate, much more in line with a sustainable rate that won’t have the market panting to keep up,” Richardson said.
Lastly, housing inventory is returning, albeit slowly. Between 2009 and 2012, the number of homes for sale plunged 44 percent, bottoming at 411,555 homes at the end of 2012, according to Redfin. At its highpoint in 2013, inventory rose to just 477,000 homes for sale and then dropped to 411,761 by year’s end. Last month, and for a second month in a row, the number of homes for sale was above 500,000, which was up 8 percent from this time last year.
The biggest year-over-year increases in homes for sale were in Riverside-San Bernardino and Orange County, California, and Phoenix, where figures were up at least 24 percent for all areas.
“Metro markets continue to get a boost from pent-up demand caused by the low inventory that plagued housing for the past two years,” Richardson said. “The second half will not be without its wobbles. But the housing market can maneuver around the juggernaut of subpar long-term economic fundamentals. Housing is now edging back to normal.”
Operating as a real estate professional without a license is a 3rd degree felony in my home state (Florida) and is considered a serious offense in most states. Check out this brief video where Matt shares how you can legally and ethically compensate someone who has brought you a real estate deal, without ending up in jail.Read More