There's been a significant bump in the number of home buyers who are coming to closing with cash.
Citing a new survey from the National Association of Realtors, the Star Tribune reports that fully one third of all home sales in Minnesota in the first quarter of 2014 were paid for with cash. The story said that 34 percent of all sales between January and March were cash; that compared to just 19 percent previously.
CNN Money reports that its a national trend. Citing RealtyTrac, the network's story said that all-cash deals hita record 43 percent of home sales during the first three months of 2014. Cash buyers paid an average of $207,668 for homes during the first quarter. One quarter of the sales were of homes either in the foreclosure process or already foreclosed on by lenders.
The story concludes that the increase hinges on two main factors: strict lending standards that make it difficult to get a mortgage and intense buyer competition for a small inventory of homes. Both mortgage issuers and home sellers favor the all-cash buyer.
Daren Blomquist, vice president at RealtyTrac, said buyers who would ordinarily finance their purchases are making all-cash offers to appear more attractive to sellers.
"If they have the ability to, homebuyers will put up cash bids just to jump to the front of the line," he said.
"It's making it harder for an ordinary single family who's getting a mortgage to compete as a buyer, especially given how constrained inventory is, and that's making for frustrated buyers in a lot of these seller's markets," Spencer Rascoff, CEO of Zillow told NBC News.
Miami, New York, Boston and coastal California cities are attracting a lot of foreign buyers who are paying in all cash. Institutional investors, which bought large numbers of distressed properties in recent years, have slowed their purchase, down to 5.6 percent of all U.S. residential sales in the first quarter of 2014 compared to 7 percent one year ago.