“Trade-downs are certainly a reason,” Yun said. “The five-year bull run on the stock market is also helping the upper-end households,” he added, noting many are diversifying out of stocks after several years of big gains.
That’s in line with what 41-year veteran Sandra Schede has been seeing.
“The rates (of return) are so low for putting their money into the bank or investments at this time that it makes much more sense to purchase real estate using cash,” said Schede, the incoming president of the Connecticut Association of Realtors.
“The rental market is really strong right now, so it gives them a better return over a short period of time.”
Boomers are buying the higher-priced properties with cash, while investors tend to buy below the midpoint price.
The trend raises questions about where first-time homebuyers fit in.
“I am worried, honestly, about having a real-estate finance structure that enables people to borrow and get a reasonable mortgage,” said Leslie Appleton-Young, the chief economist of the California Association of Realtors.
Her state sees cash buyers from China and Canada snap up investment property of all sorts in Los Angeles and the San Francisco area, and often traditional buyers “are not able to compete with all-cash,” she said.
Yun’s staff analyzed the national data to provide state-by-state estimates on all-cash sales as a percentage of total sales. The group plans to make this sort of data public going forward, and will issue its first such report yesterday.
The Realtors’ group was able to calculate a reliable estimate for 29 states, while surveys in the other 21 states and the District of Columbia were considered to have sample sizes insufficient to offer a hard number. Instead, a range was given for four of these 21 states. The Realtors’ group did so with the warning that these ranges aren’t considered statistically reliable for Idaho, Kansas, Kentucky and Mississippi.