Florida leads cash sales of us property

Photo: Fifth World Art

Florida is the state with the highest number of cash property sales. The sunshine state has always been one of the most popular markets among overseas investors, with a large majority of foreign buyers using cash to complete their transactions. Now, though, new research confirms just how much higher than the national average Florida is: over half (51.4 per cent) of its sales are conducted in cash, followed by Alabama (48.5 per cent), West Virginia (48.3 per cent), New York (45.4 per cent) and Kentucky (41.4 per cent).

Overall, cash sales made up 33.7 per cent of total home sales in April 2015, down 0.9 percentage points from March 2015. Seasonal summer slowdown, though, is a factor in the market's performance, which means that year-on-year comparisons are a more reliable indicator of trends. April's share fell 3.7 percentage points from a year earlier, marking the 28th month of annual decline in a row.

The decrease highlights the stability of the market, which continues to recover from the recession to a more normal balance of supply and demand. Indeed, the cash sales share peak occurred in January 2011 when cash transactions made up 46.5 per cent of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 per cent. If the cash sales share continues to fall at the same rate it did in April 2015, the share should return to normal levels by mid-2017.

Real estate-owned (REO) sales had the largest cash sales share in April 2015 at 56.6 percent and was the only sales category to see a year-over-year increase in the cash sales share. Resales had the next highest cash share at 33.3 percent, followed by short sales (30.4 percent) and newly constructed homes (15.3 percent). In January 2011 when the cash sales share was at its peak, REO sales made up 23.9 per cent of total home sales. Resales make up the majority of home sales (about 81 percent in April 2015), and therefore have the biggest impact on the total cash sales share.

In Florida, West Palm Beach-Boca Raton-Delray Beach had the highest share of cash sales at 59.1 per cent, followed by North Port-Sarasota-Bradenton (58.5 per cent). Detroit-Dearborn-Livonia, though, in Michigan, is also a highly cash-driven market, with cash making up 58 per cent of transactions.