Cash Sales On Track To Decline To Pre-Crisis Levels By 2017

Peoples Home Equity was intrigued by a recent January 14th Corelogic article titled “At Current Rate of Decline, Cash Sales Share Should Reach Pre-Crisis Levels in 2017.”
Corelogic begins its article by highlighting the fact that “Cash sales made up 35.5 percent of total home sales in October 2014, down from 38.7 percent in October 2013. In addition, this decline marks the 22nd consecutive month of year-over-year price declines since January 2013.
In terms of monthly performance Corelogic stated “Month over month, the cash sales share ticked up by half of a percentage point, as is typical for the fall and winter months. Due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis. The peak occurred in January 2011 when cash transactions made up 46.4 percent of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. At the current rate of year-over-year decrease, the cash sales share should be back to pre-crisis levels in 2017.”
Peoples Home Equity thinks a pre-crisis level of cash sales will create a great environment for first-time home buyers to thrive. While cash sales have been on the decline since the great recession, the few number of first-time home buyers approved for a home loan have had to compete with cash buyers. Now that the number of cash sales are drying up, and more American’s have jobs, a larger number of credit worthy pre-approved first-time home buyers are set to spark a surge of financed home sales this spring and summer. Lenders like Peoples Home Equity has a high expectation of more active home buyers this spring and summer since Corelogic’s map (picture attached) showed that both East and Midwest states had the highest number of total home sales being cash. To name a few; Indiana 41% of total sales were cash sales, Kentucky 41%, Tennessee 41%, Michigan 43%, New York 44%, Alabama 51%, and Florida 51%. To be more specific, “Miami-Miami Beach-Kendall, Fla. had the highest share of cash sales at 56.6 percent.”
The area with the lowest share of cash sales was “Washington-Arlington-Alexandria, D.C.-Va.-Md at just 16%. Maryland was the only state to have the total share of cash sales be under 20%, at just 15%.
If in need of a mortgage, contact a Peoples Home Equity loan officer today at: 262-563-4026