Florida led the nation last month with what one expert called an “astounding” rate of all-cash home sales: 66 percent, a new report shows.
Investor groups, international buyers, landlords and those in the market for vacation homes are fueling a cash-only market that has virtually shut out entry-level homebuyers, who can’t get approved for mortgages.
Lake Mary real-estate agent Tom O’Brien said he recently represented a single mother employed by Valencia College who wanted to buy a house near downtown Sanford.
“The seller said he wanted to hold out for a cash buyer instead of waiting for her FHA mortgage to get approved,” O’Brien said Wednesday. “The first-time buyers are the ones who are really struggling; they’re scraping together every nickel, and they’re competing with the cash buyers.”
The influx of cash continues to grow in one of the country’s most volatile states for real estate: Cash sales made up 57 percent of Florida’s home sales a year ago and 61 percent of all sales in June of this year, compared with the 66 percent reported in July, according to the report released today by the real estate research company RealtyTrac Inc.
“That’s astounding,” RealtyTrac Vice President Daren Blomquist said. Nationwide, only Nevada (64 percent) and Maine (60 percent) came even close to Florida’s tidal wave of cash-only deals.
Among Florida’s metropolitan areas, Brevard County had the highest rate of cash deals: Seven out of every 10 house sales last month went for cash. Next in line was the giant metro area that includes Miami, Fort Lauderdale and West Palm Beach; 69 percent of all sales there were all-cash deals.
One factor tipping the scales in cash buyers’ favor has been the tightening of mortgage requirements following the easy-lending era that preceded the 2007-09 recession.
“The home-loan mortgage market has utterly dried up,” said Mark Soskin, an associate professor of economics in the University of Central Florida’s business college. “The market requires buyers and sellers, [but] if you want to buy a house, you have to have cash.”
Private-equity firms and institutional buyers have been actively picking up Florida’s lower-priced houses, fixing them up, and renting them for some time already, but those buyers are moving on to other states, RealtyTrac’s report shows. During July, institutional buyers drove 22 percent of the home sales in Georgia, 16 percent in Nevada, 15 percent in Arizona and 14 percent in Florida.
According to Blomquist, Florida last month attracted more small-scale investors, as well as buyers interested in buying second homes or paying cash for their retirement housing. He said he has heard from investment groups that they have turned to the Carolinas and other markets that still offer good returns and until now have been below the radar compared with Florida.
Regardless of who has been laying down all the cash in Florida, the trend has helped the market by flushing sales through the system, Winter Park real estate broker Scott Hillman said.