The number of all-cash homebuyers in the U.S. continued to dwindle at the start of the year, but this masked a growing divergence between the low and top ends of the country’s real estate market.
For the first three months of the year, around 35% of all homes sold were paid for in cash, the lowest start to any year since 2008, according to data firm CoreLogic. This was way below a peak of 47% at the beginning of 2011, and CoreLogic has predicted that it could fall as low as 25% by mid-2018.
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However, the headline numbers masked a growing divergence between those at the bottom of the housing market and luxury buyers. CoreLogic said that the proportion of cash sales were declining at the affordable end of the market because a lot more people were taking out mortgages amid rising confidence about the domestic economy and jobs.
In contrast, cash sales are on the increase in the luxury sector as investors see property as a safe haven for their money. Specifically, Asian investors are flooding San Francisco and Seattle; Americans are pumping money into Florida (and Miami in particular); and, as ever, investors from around the world are protecting their wealth in New York real estate.
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A regional breakdown of the numbers showed that Alabama had the largest cash sales share of any state at 49.8% in March, followed by New York at 47.5%, Florida at 45.9% and Michigan at 41.8%.