Where In The U.S. Are Most Homes Bought With Cash?
The share of U.S. home purchases paid in cash has fallen year-over-year since January 2013 to 37.9% in February of this year, as the number of foreclosed homes dwindles.
Cash is still king in Florida and Alabama, though, accounting for more than half of homebuying, according to a housing trends report from CoreLogic (NYSE:CLGX).
In Florida’s case, not only are there many foreclosed homes vs. most other states, but also South Florida sees a lot of purchases by international buyers. These purchases can skew toward cash, as can purchases of second homes and vacation homes, due to the difficulty of getting financing for them and to the use of such homes as investments.
CoreLogic noted in its report that cash sales’ share peak occurred in January 2011, when cash transactions were 46.5% of home sales nationally, vs. an average of about 25% before the housing crisis. Due to seasonality, the report says, it’s better to look at changes on a year-over-year basis than month-to-month.
Repossessed homes, or REOs (real estate owned by banks) accounted for about 60% of cash buys, followed by resales at around 38% and then short sales at just over 34%. Nearly 16% of new homes were paid for in cash, too.
Homebuilders Toll Bros. (NYSE:TOL), PulteGroup (NYSE:PHM) and Lennar (NYSE:LEN) are among the companies that build homes in various vacation and resort spots that are popular places for second homes, among other locales.
If you’re looking at which large metro areas have the most cash purchasing, head for Detroit or Miami, where it was 59% in February. Just behind those areas came the Fort Lauderdale and West Palm Beach areas of South Florida. Lowest on the list of big metro areas was Washington, D.C., where under 17% of homes were paid for in cash in February.
Follow Donna Howell on Twitter: @IBD_DHowell.
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