Holy Schmoly More Than Half of All U.S. Homes Sold Last Year Financed by Cash — Goldman Sachs

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DollarBillFanThis caught my eye in the Wall Street Journal last week: “more than half of all homes sold last year and so far in 2013 have been financed without a mortgage, according to an analysis by economists at Goldman Sachs Group.”

According to the analysts, 20% of all homes sold before the housing crash were “all-cash” sales, or around 30% of sales by dollar volume. But that has changed dramatically over the past seven years. Now the all-cash share of home sales has more than doubled, increasing by more than 30 percentage points.

Where did they get their numbers? Goldman scrutinized home sales figures from the Census Bureau and the National Association of Realtors and mortgage-origination data from the Mortgage Bankers Association and Lender Processing Services.

This explains why home sales have jumped over the past two years despite more hoops to jump through to become qualified for a mortgages, and the declining mortgage application index. Today Wells Fargo reports laying off 2300 employees due to increases in mortgage rates, which are stymying re-fis.

Who is making all these cash purchases? Investors, foreign buyers, and wealthy homeowners that likely do not want to go through the hassle of getting a mortgage. Some are downsizing to smaller homes equity rich before closing on a sale. Others are loving real estate as an investment more than the stock market. We sure know how lending standards have tightened up since the housing bubble. Banks now scrutinize borrowers’ tax returns and bank statements to verify their incomes and the source of their down payment, and the self-employed have been targeted.

I know of a lot of cash deals in Dallas, tell us what you are seeing on the real estate streets.



Candy Evans

A real estate muckraker, Candy Evans is one of the nation’s leading real estate reporters. She is also the North Texas real estate editor for Forbes.com, CultureMap Dallas, Modern Luxury Dallas, & the Katy Trail Weekly. Candy has written for Joel Kotkin’s The New Geography, Inman Real Estate News, plus a host of national sites. Constantly breaking celebrity real estate news, she scooped former president George W. Bush's Dallas home in 2008. She is the founder and publisher of her signature CandysDirt.com, and SecondShelters.com, devoted to the vacation home market. Her verticals have won many awards, including Best Blog by the venerable National Association of Real Estate Editors, one of the nation’s oldest and most prestigious journalism associations. Candy holds an active Texas real estate license but does not sell. She is on the Board of Directors of Braemar Hotels & Resorts (BHR).

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