Home sales are rising, largely driven by low inventories, rising consumer expectations, and shrinking distressed inventory. But wait, aren’t low interest rates the number one factor in increasing property sales? New research from Goldman Sachs indicates low rates may be slightly less important than many think.
Many buyers are reaching into their pockets to purchase homes with cash. Goldman Sachs estimates that between 1st quarter of last year and 1st quarter of this year, a whopping 57% of residential sales were all-cash transactions. However, in a real estate market where the total number of deals is rising, this still leaves room for an increasing number of mortgages for home purchase. According to just released Federal Reserve data for 2012, the number of loans made to people actually buying homes (as opposed to refinancing), increased by 13%, compared to 2011. This represented a five year high.
The Goldman Sachs’ analysis estimates that around 20% of all homes sold before the housing downturn were all-cash sales (approximately 30% of sales by dollar volume). But over the past seven years, a flood of money into the housing market has resulted in the all-cash share of sales more than doubling.
Whether your customers prefer to buy using a mortgage, or by paying all-cash, the good news is they’re buying!