The Share of All Cash Luxury Real Estate Buyers Highest Since 2014

The Share of All Cash Luxury Real Estate Buyers Highest Since 2014

While mortgage interest rates have risen from their all-time lows in recent years, the share of all cash buyers is growing. Since October 2022, all cash home buyers, those who did not finance their home purchase, made up more than one-quarter of the real estate market -- 32% in January 2024. The last time the share of all cash buyers was this high was June 2014.

Luxury Vacation Home  Buyers Are Cash Buyers

So, who are these home buyers? Data from the last six months of the REALTORS® Confidence Index shows they are more likely to be vacation buyers and investors. However, primary residence buyers are actively purchasing using all cash.

Repeat Luxury Home  Buyers Are Cash Buyers

Looking at primary residence buyers, all cash purchases have increased in the last two years. These housing consumers owned a home, sold it, and then they could purchase their next property without a mortgage. The freedom to make this purchase was likely due to the large amount of housing equity they have earned as home prices have increased in recent years.

In 2003, just 10% of repeat primary residence home buyers were able to make an all cash home purchase, while in 2023, 26% of repeat buyers were able to skip a mortgage payment. This remains uncommon among first-time buyers. However, 6% of first-time buyers made an all cash purchase in 2023 compared to 4% in 2003.

Luxury Home Cash Buyers Move Further

Aside from the housing equity, one explanation for these primary residence home buyers to be able to pay all cash is they are more likely to move long distances. For all cash primary residence buyers, they moved a median of 60 miles, with 29% moving 500 miles or more. In comparison, among those who financed their home purchase, only 16% moved 500 miles or more, and the median distance moved was just 18 miles. While long-distance moves were most popular during the beginning of the COVID-19 pandemic, they are still occurring, especially among retirees and those able to work fully remotely.

As home prices are expected to increase throughout 2024, due to limited housing inventory and high demand to purchase homes, these all cash buyers are likely to still be prevalent in the market as homeowners earn more housing equity. In January, the typical home received 2.7 offers. If multiple offers continue, these all cash buyers will likely win bidding wars. Those who are financing may not be the winning contract on the home.

Jessica Lautz
Deputy Chief Economist and Vice President of Research
National Association of REALTORS®.

Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission.

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