24% of Homes Sold This Year Were Bought With All Cash, the Smallest Share in 13 Years

Rhea-AI Summary

As of December 2020, 24.3% of homes sold in the U.S. were purchased with cash, a decrease from 25.3% in 2019, marking the lowest percentage since 2007. Reflected in a report by Redfin, this trend signals a shift driven by lower mortgage rates averaging 2.71%. Chief economist Daryl Fairweather suggests buyers prefer loans due to low interest rates, opting to invest cash elsewhere. In Nassau County, cash purchases soared to 48.9%, indicating regional variations in buying behavior amidst the pandemic.

Positive

• Nassau County reported the highest cash purchase share at 48.9%, indicating strong demand in suburban areas.
• The average mortgage rate dropped to historic lows (2.71%), making loans more attractive than cash purchases.

Negative

• The overall decline in cash purchases from 25.3% in 2019 to 24.3% in 2020 may indicate reduced buyer confidence.

SEATTLE, Dec. 18, 2020 /PRNewswire/ -- (NASDAQ: RDFN) — Nationwide, 24.3% of homes sold so far this year were bought with cash, down from 25.3% in 2019 and the smallest share since 2007. This is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. All-cash home purchases peaked in 2013, when 34% of homes sold were bought with cash. The share has generally declined since then. 

Because of the pandemic-driven recession, mortgage rates are at record lows this year, dropping as low as an average of 2.71%.

"With interest payments lower than ever before, many homebuyers would prefer taking out a home loan and putting their cash somewhere else, like the stock market, emergency savings accounts or home renovations," said Redfin chief economist Daryl Fairweather. "Many of the buyers who are using all cash this year are probably trying to beat out other offers in a situation with multiple offers."

In Nassau County on Long Island, 48.9% of homes sold this year were all-cash purchases, a higher share than any other major metro area.

"Buyers are flocking to Nassau County from Manhattan and Queens this year, as the pandemic and remote work drives them away from the city and toward a more suburban area with spacious homes and backyards," said local Redfin agent Peggy Papazaharias. "A lot of buyers are paying cash because they want to beat out the competition, move quickly and get into their new house and new lifestyle as soon as possible. Nassau County is the closest suburban-feeling area to Manhattan, so it's a desirable location for remote workers and people who will eventually have to commute into the city one or two days a week."

Nassau County is followed by six Florida metros: North Port (41%), West Palm Beach (40.3%), Cape Coral (39.8%), Fort Lauderdale (33.4%), Miami (30.8%) and Tampa (30.1%). 

Oakland had the smallest share of all-cash purchases, 13.1%, followed by Virginia Beach (13.8%), San Diego (15.1%), Denver (15.2%) and Portland, Oregon (15.6%). Oakland, where the typical home sold for $821,000 in October, is one of the most expensive housing markets in the country, and the median home prices in San Diego, Denver and Portland are all well above the national median of $336,000. High home prices is one reason for such a low share of all-cash home purchases in those places. The story is different in Virginia Beach, where the typical home sold for $265,000 in October and a lot of buyers use VA loans—which don't require down payments—to purchase homes.

"Virginia Beach, particularly Hampton Roads, has a large military presence, which means a lot of buyers are able to purchase homes using VA loans," said Virginia Beach agent Jordan Hammond. "Because buyers have many different loan types available in this area, all-cash purchases are relatively uncommon."

Metro area	Share of home sales that were bought in all-cash eals, 2020	Share of home sales that were bought in all-cash deals, 2019	Median sale price (Oct. 2020)
Nassau County, NY	48.9%	36.2%	$530,000
North Port, FL	41.0%	42.9%	$325,000
West Palm Beach, FL	40.3%	42.8%	$334,000
Cape Coral, FL	39.8%	43.6%	$270,000
Fort Lauderdale, FL	33.4%	36.5%	$305,000
Miami, FL	30.8%	34.9%	$350,000
Tampa, FL	30.1%	33.6%	$269,900
Atlanta, GA	29.4%	31.7%	$285,000
Tucson, AZ	27.6%	28.1%	$265,000
Jacksonville, FL	27.2%	30.6%	$264,000
New Brunswick, NJ	26.8%	27.9%	$383,000
Phoenix, AZ	26.1%	28.8%	$339,000
Orlando, FL	26.1%	31.1%	$284,000
Las Vegas, NV	25.8%	29.1%	$317,000
Cleveland, OH	25.6%	26.6%	$177,000
New York, NY	25.2%	27.3%	$550,000
Warren, MI	23.8%	22.7%	$245,000
Cincinnati, OH	23.7%	23.2%	$216,000
Charlotte, NC	23.2%	28.4%	$297,000
Nashville, TN	23.0%	25.8%	$336,100
Oklahoma City, OK	22.3%	25.7%	$214,900
Seattle, WA	21.6%	20.4%	$635,000
Columbus, OH	21.1%	20.8%	$250,000
Anaheim, CA	20.4%	20.3%	$795,000
Chicago, IL	20.1%	22.6%	$275,000
Riverside, CA	19.6%	19.8%	$439,000
Raleigh, NC	18.6%	23.9%	$315,000
Minneapolis, MN	18.5%	21.1%	$315,000
Washington, DC	17.9%	14.1%	$457,700
Los Angeles, CA	17.8%	17.2%	$735,000
Sacramento, CA	16.6%	17.7%	$480,000
Baltimore, MD	16.5%	16.6%	$320,000
Portland, OR	15.6%	17.1%	$450,000
Denver, CO	15.2%	17.9%	$470,000
San Diego, CA	15.1%	16.2%	$660,000
Virginia Beach, VA	13.8%	13.4%	$265,000
Oakland, CA	13.1%	13.1%	$821,000

To view the full report, with additional charts and data, please visit: https://www.redfin.com/news/all-cash-home-purchases-smallest-share-since-2007 

About Redfin 
Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer's favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country's #1 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we've helped them buy or sell more than 235,000 homes worth more than $115 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

 

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SOURCE Redfin

FAQ

What percentage of homes were bought with cash in 2020 according to RDFN?

In 2020, 24.3% of homes sold were purchased with cash.

What was the average mortgage rate in 2020 as reported by RDFN?

The average mortgage rate dropped to 2.71% in 2020.

What was the cash purchase rate of homes in Nassau County, NY?

Nassau County had a cash purchase rate of 48.9% in 2020.

How does the cash purchase rate in 2020 compare to 2019?

The cash purchase rate decreased from 25.3% in 2019 to 24.3% in 2020.