A quarter of existing home sales in April were all cash, leaving first-time buyers with little leverage during the most competitive spring buying season in 50 years. According to data from the National Association of Realtors, the share of all-cash offers reached 25% last month, compared to 15% in 2020 and 20% in 2019. Further breaking it down, when it comes to non-first-time buyers, 33.5% of them made all-cash offers in April while just 6.1% of first-time buyers made all-cash offers. Vacation home purchases are boosting the all-cash offer share as well with 61% of vacation home purchases coming in all cash.
Cash sales have also been rising with more vacation sales and with a higher fraction of vacation home buyers paying all-cash. Vacation sales rose to 8% in April, up from 6% normally. Buyers could be anticipating the use of these second homes as both vacation and home offices during weekends for workers who don't have to go to the office all throughout the week and for longer times in summer for those workers who could arrange to work from home or away from the office during some months of the year.
Not only are vacation sales rising, but the share of all-cash sales among vacation homes is also rising, with the share increasing to 61% in April 2021, compared to just nearly 50% in past years.
However, there has been no noticeable shift in the share of all-cash sales among homebuyers who purchased a property to then rent out. With low mortgage rates, homebuyers who intend to rent out the property are taking advantage of low mortgage rates to finance the acquisition of the property. However, they could be putting down higher down payments of over 20%.
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