May 24, 2021Working With Sellers, StagingBy: Melissa Dittmann TraceyIf your listing has any of these features, be sure to promote them.Eighty-two percent of homeowners say they are more
Amidst the most competitive spring market in 50 years, the share of all-cash sales to existing-home sales surged to 25% in April 2021 as non-first time buyers are paying all cash to increase the competitiveness of their offers, edging out first-time buyers, according to the April 2021 Realtors® Confidence Index Survey. This is a significant increase from the 15% share one year ago and 20% share in 2019.1
According to one REALTOR® who offered a comment in the April 2021 survey, "Buyers are losing to cash buyers and VA & FHA buyers are hurting." Another REALTOR® said "there is an unprecedented (number of ) cash buyers despite low mortgage rates."
More non-first-time buyers paying all-cash
With fewer properties on the market compared to one year ago, a higher fraction of non-first-time buyers are making all-cash offers. The share of cash sales among non-first-time buyers has increased sharply to 33.5% in April 2021. In April 2019, only 26.3% of non-first-time buyers made an all-cash purchase. Meanwhile, 6% of first-time buyers made an all-cash purchase in April 2021, with little change from the average of 6% share since 2018.
More primary residence buyers are paying all-cashLooking at the cash sales by the buyer's intended use of the buyer2, the share of cash buyers among primary residence buyers has also significantly shifted upwards. In April 2018 and April 2019, only about 12% of primary residence buyers made an all-cash purchase, but the share has increased to 15% as of April 2021.
Rising vacation home sales with rising share of cash sales
Cash sales have also been rising with more vacation sales and with a higher fraction of vacation home buyers paying all-cash. Vacation sales rose to 8% in April, up from 6% normally. Buyers could be anticipating the use of these second homes as both vacation and home offices during weekends for workers who don't have to go to the office all throughout the week and for longer times in summer for those workers who could arrange to work from home or away from the office during some months of the year.
Not only are vacation sales rising, but the share of all-cash sales among vacation homes is also rising, with the share increasing to 61% in April 2021, compared to just nearly 50% in past years.
The share of all-cash sales among investors stayed flat
However, there has been no noticeable shift in the share of all-cash sales among homebuyers who purchased a property to then rent out. With low mortgage rates, homebuyers who intend to rent out the property are taking advantage of low mortgage rates to finance the acquisition of the property. However, they could be putting down higher down payments of over 20%.
Homebuyers, overall, have been putting down a higher down payment to also increase the attractiveness of their offer. Among homebuyers who obtained a mortgage, 50% put down less than 20%. In prior years, this share has hovered at 55% to 60%.
1 The monthly REALTORS® Confidence Index Survey is sent to a random sample of 50,000 REALTORS®. The question about cash sales has about 1,500 to 2,000 respondents every month.
2 The question on the buyer's intended use of the property (primary residence, vacation , investment use) has about 1,000 respondents every month.