The share of all-cash home purchases surged at the beginning of 2021 as competition tightened in the for-sale market, and by October 2022, roughly one-third (31.9%) of all homes taken off the market were paid for with all cash, the highest share since 2014, Forbes reports. Rather than offering cash to solely beat out the competition, today’s buyers are also looking to avoid costly loans amid a run-up in mortgage rates.
All-cash purchases were most prevalent in Florida metros in October, led by Jacksonville, where roughly half (49.7%) of homes were bought with cash, followed by all-cash offers in 48.6% of all home sales in West Palm Beach.
“Today’s affluent home buyers are motivated to pay in cash because the surge in mortgage rates makes them want to avoid loans—and the high monthly interest payments that come with them—altogether,” said Chen Zhao, Redfin’s economics research lead. “Mortgage rates have declined in recent weeks but are still hovering above 6%. During the pandemic housing boom, buyers were incentivized to pay in cash because of low rates, which drove up competition and made all-cash offers an effective bargaining chip for those who could afford them.”
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