All-Cash Sales Hover Near One-Third of Transactions

The mortgage meltdown and its somewhat predictable fallout—tighter regulations that ensure such a crisis cannot recur but choke lending and borrowing at the source—have led to an equally inevitable outcome: a glut in cash sales for homes. A recent report by Redfin shows that in 17 metro markets in the United States, a full third of sales this year have been all-cash deals. And that figure has been essentially flat since 2011.

Moreover, financed purchases are still way down from their 2000 peak, when 800,000 homes were mortgage buys. By 2011, that number plunged to 440,000 and only recovered to 520,000 in 2013.

The all-cash economy kicked off in earnest in 2007 as the national housing market walked off a cliff. It grew steadily through the next few years. Redfin attributes the steadiness of the all-cash phenomenon to tightened lending regulations, but also to the lowered inventory in most areas.

Redfin also cites investor purchases as a reason the all-cash figures have been so steady, though investor purchases have waned this year. Redfin's figures are notably lower than those released by RealtyTrac earlier this month. That firm found that all-cash deals comprised 42 percent of U.S. residential sales so far this year. However, RealtyTrac measured sales in more than 17 metros.

The largest effect of the all-cash deal, of course, is on competition for buyers. Sellers typically prefer cash deals because they come with shorter waits, fewer complications, and a much lower chance that financing will fall through. Most of the competition, according to Redfin, lies outside of the $200,000-to-$600,000 market. This middle range accounts for roughly half of all home sales and is the most active for mortgage financing, as buyers either don't have enough money to buy outright in this range or can afford to buy higher-end properties.

Miami leads the metros in Redfin's all-cash-sales capitals, where 64 percent of homes were bought without financing. In the $50,000-to-$100,000 range, 87 percent of homes in Miami were all-cash deals so far this year. Miami's closest competition is Las Vegas, where 80 percent of sales in that same range were all cash. Almost half of Vegas' overall sales so far this year have been cash.

The Beltway has the lowest all-cash numbers so far this year. Baltimore and Washington, D.C., have had, respectively, 21 and 20 percent all-cash deals overall, though Washington saw three-quarters of its $50,000-to-$100,000 purchases made with cash. Denver tied with Baltimore for an overall 21 percent non-financed sales.