Investors with cash are buying houses
More home buyers are snapping up properties with cash, a trend driven in
large part by investors returning to the market after four years of falling
prices around the country.
The share of home sales involving all-cash transactions was 26% in January,
up from 18% a year earlier, according to the National Association of
Realtors. Many home buyers also are paying cash, but investors are largely
using cash so they can avoid paying interest charges on loans and get a
larger return on their investment.
Other NAR data also show a pickup in investment activity. Home purchases
made by buyers identified as investors climbed to 17% in January, up from
15% in December and 12% in November.
"We bottomed out in 2008, and in late 2009, prices stabilized and investors
have returned," says Mark Fleming, chief economist at First American
CoreLogic. "It's a different type of investor going after foreclosed
properties and expecting to hold on for longer time frames."
All-cash purchases also reflect a growing number of investors buying
higher-end properties without credit, says NAR spokesman Walter Molony.
That's a sign that some investors see real estate prices as having nowhere
to go but up. All-cash offers give buyers a competitive edge on rival offers
- even higher ones - that are dependent on financing. Cash deals can close
faster and are less likely to fall through.
"You have to have cash to be able to close quickly and have negotiating
power. Cash is king," says Tanya Marchiol of Phoenix. “ Now is the time to
buy for cash flow. We know the market is going to rebound."
Some investors say the current real estate market is an ideal time to buy
because homes are so low priced, they are bound to hold their value.
Posted: 22 March 2010
Source: USA Today
Click here for original article
