The amount of property transactions in the United States that are completed in cash has surged massively since the beginning of the housing crisis, the National Association of Realtors claims, and sales are actually still speeding up.
"We've seen a tremendous increase in cash buyers since the housing downturn that we haven't seen before in history," chief economist Lawrence Yun said at the 2012 Realtors conference recently. Yun says that ten years ago home purchases completed in cash constituted below 10% of the market, but the amount has been steadily increasing since 2008 and now represent nearly 30% of all sales.
The increase in buyers who are paying cash for real estate is a reflection of tight lending conditions and a rise in investor sales, Yun believes. The increase in the amount of buyers from overseas, who often have difficulty with financing when it comes to buying a property in the United States, is also an additional reason for the rise in cash sales. Research from NAR indicates that 62% of all international purchases were made in cash, a percentage that has been continually on the increase for the last five years.
Recent NAR research into the sources of down payments might also provide some insight into how cash buyers are able to receive the funds for their property purchases. The NAR Home Buyers and Sellers Profile for 2012 states that 40% of repeat purchasers use the proceeds from the selling of their main residence as their down payment source, with many boomers who are downsizing having enough equity left from the sale of their home to be able to pay for their next purchase entirely in cash.