By Emmanuel Martinez, Kevin Schaul & Hamza Shaban | The Washington Post
Rising interest rates, soaring home prices and decreasing inventory aren’t the only things making it difficult to buy a home these days.
Last year, nearly a third of U.S. homes were purchased with cash, according to data provided by the realty company Redfin. That’s an 8 percent increase from 2021, continuing a trend that started during the pandemic. The share of homes bought with cash is now at levels not seen since 2014, when the housing market was on the rebound after the foreclosure crisis and the Great Recession.
The rise of all-cash buys comes at a time when the average home buyer is increasingly likely to be White, wealthy and older and the proportion of first-time buyers is at its lowest in more than 40 years.
“Only the wealthy are essentially buying homes,” said Lawrence Yun, chief economist at National Association of Realtors. “If this trend was to continue, that means something fundamentally is wrong with society.”
Highest shares of Northeast Valley homes bought with cash
Percent of purchased homes bought in all cash
Early in the pandemic, home buyers seeking more space desperately outbid one another in the frenzied housing market. Now all-cash offers continue, even as the housing market has cooled, as a way to sidestep rising interest rates.
“What we found was those that already were more well-off were able to take advantage of the strong housing market and add to their wealth, while those trying to better their situation were often pushed to the side,” said Ali Wolf, chief economist at Zonda, a housing data and consulting firm.
Retirees, buyers who relocated using home equity proceeds, foreign buyers, investors and high-wealth individuals all outgunned bidders who needed the help of banks to finance their offers, real estate experts said.
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