Good News South Florida: Less Cash Sales
Written by Emil Fleysher | September 15, 2014 | Short Sale
A report provided by the Realtors Association of the Palm Beaches states that investors, which predominately purchase properties in cash only, are at the lowest point in several years. Cash deals are a characteristic of investors and it helps differentiate them from homebuyers who customarily require mortgages. These sales went down by 11.5 percent in July compared to the beginning of the year but were only second to the abrupt 12 percent fall off the country recorded in February’s numbers.
In January at least 50 percent of the prospective buyers were all dealing in cash, as opposed to the less than 42 percent in July. The sales still slowed down although 90 percent of the cash deals in Miami-Dade County were done by overseas buyers. During the first quarter 63 percent of the deals were all closed cash deals in comparison to the 58 percent in the second quarter, declared the Miami Association of Realtors.
However, those that watch the market state that there is another way to suspend the decline. Since investment properties are doing well, the banks are more willing to give out mortgage loans to those who need it. Commercial properties have had an incline in received financing from lenders in both private equity firms and traditional and now potential homeowners are too thanks to the diminishing cash sales.
Many believe that because banks are offering more loans that it points to a better economical period. Lenders are even providing loans to those who had done short sales or have recently going through bankruptcy. This is something that was previously unheard of. Now that the real estate market is equalizing, cash sales have slowed down because there aren’t as many bargains as before and real buyers have a fighting chance at getting loans.
Some state that the downside to the decline in cash sales is the longer sale times and the greater the inventory. In July 2013 the inventory was the lowest it had been since 2008 in Palm Beach Country; however, in July 2014 the inventory went up 27 percent. South Florida had the most cash deals in the nation. The research firm RealtyTrac LLC stated that during the second quarter, nearly two-thirds of all property sales were cash sales.
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