All-Cash Home Purchases: Looking Behind the Numbers

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All-Cash Home Purchases: Looking Behind the Numbers

Get your FICO® Score FreeBy Lynnette Khalfani-Cox for Housingwatch

Move-up buyers and baby boomers who are scaling down their lifestyle actually represent the biggest numbers of those who are snatching up homes with all-cash deals, experts say.

Jed Smith, an economist and managing director of quantitative research at NAR, broke down the numbers for HousingWatch:

Wealthy foreigners: 2 percent
Investors: 12 percent
Repeat buyers: 86 percent

Right now, NAR is forecasting 5.4 million existing-home sales in the U.S. for 2010.

According to Smith, foreigners account for about 4 percent of all U.S. existing-home sales. Investor activity makes up roughly 18 percent all of property sales. The remaining 78 percent of home purchases are made by first-time buyers (40 percent) and repeat buyers (38 percent).

Since about half of all foreigners pay outright for real estate, Smith says, that means wealthy foreigners represent a total of 2 percent of all-cash buyers. Based on Realtor feedback, Smith says a majority of investors are paying cash. So he estimated that about 12 percent of the all-cash market is derived from investors. The remaining 86 percent of all-cash buyers is from those with enough assets to buy without a mortgage.

Who make up that last group? They certainly aren’t first-time buyers. Most first-timers have a hard enough time coming up with a down payment; recently, most have been putting down 3 percent to 5 percent to buy their homes, and then getting a mortgage to finance the purchase. - Read the rest of this article on Housingwatch

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Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.