Home buyers in Southwest Florida are still paying with cash at one of the fastest rates in the nation.
Of the 10 metro areas with the highest share of cash purchases in the first quarter, more than half were in Florida, according to real estate analyst Zillow.
Southwest Florida Buyers Paying Cash
“In Florida, cash is king,” Zillow said. ” At the end of the first quarter, seven of the top 10 metros with the highest share of home purchases made in cash were in Florida, up from six at the end of 2014.”
All 10 of the U.S. metro areas with the highest share of cash buyers were east of the Mississippi River, while cash buyers were less common in the western U.S.
“Homes in many eastern markets are generally less expensive than in their western counterparts, which can be conducive to more cash purchases,” Zillow said. “Cash purchases are also more likely to be made by investors and institutional buyers looking to buy many less-expensive homes all at once to convert into rental housing and/or flip as the market improves.”
In addition, the analyst noted, Florida’s judicial foreclosure process can be slow, extending the period when investors are buying discounted homes from lenders as they clear foreclosure.
Florida posted the second-highest share of cash sales in June, at 45.8 percent, behind only New York’s 47 percent, CoreLogic said.
The U.S. rate was 31.3 percent, down from 34 percent over the year.
“The cash sales share peaked in January 2011, when cash transactions made up 46.5 percent of total home sales nationally,” CoreLogic said. “Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in June 2015, the share should hit 25 percent by mid-2017.”
Jim Quinn, president of the Port Charlotte-North Port-Punta Gorda Association of Realtors, said cash sales have “consistently” accounted for less than 50 percent of activity this year, with distressed properties representing a smaller segment of sales.
“I would say both of these trends are indicative that more of the buyers are purchasing for personal use as opposed to investment,” he said.
No-financing sales accounted for 43 percent of home deals throughout Florida in August, while the U.S. average was 24.5 percent.
Herald Tribune 10/5/2015