The proportion of cash buyers in the real estate market has been on the rise in recent years. In September 2023, cash buyers accounted for 34.1% of all home sales in the United States, the highest share in nearly a decade. This is up from 29.5% a year earlier. According to a recent report, the proportion of cash buyers was higher in Florida than what was observed throughout the rest of the country. In fact, all six Florida metros included in this analysis exceeded the national average.
Percentage of cash buyers by Florida metro
- Fort Lauderdale: 40.5%, down 0.5 percentage points year-to-year
- Jacksonville: 46.2%, up 3.2 points
- Miami: 40.7%, up 2.0 points
- Orlando: 40.0%, up 0.6 points
- Tampa: 38.2%, up 0.2 points
- West Palm Beach: 49.0%, up 0.8 points
Reasons for the increase in cash buyers
All-cash purchases have made up a bigger proportion of the home buying market. The most common reasons for this are:
- Higher mortgage rates: Mortgage rates have been rising sharply in recent months, making it more expensive to borrow money to buy a home. This has made it more difficult for some buyers to qualify for a mortgage, and has resulted in more potential buyers exiting the housing market entirely. Needless to say, cash buyers have not been impacted by these higher rates and therefore have represented a larger proportion of home buyers.
- More negotiating power: There is no doubt that higher home prices and higher mortgage rates have resulted in a slowdown in the housing market. With this said, homes are typically taking longer to sell given the lower number of potential buyers in the market. For cash buyers however, this can be an opportune time to negotiate with sellers.
Summary
Given the current economic headwinds, it is not surprising at all to see cash buyers representing a larger proportion of the total home purchases in this market. In fact, with more buyers being priced out of the market due to higher mortgage rates, this makes perfect sense. If you are a traditional home buyer that needs to obtain financing for a purchase, here are some helpful tips:
- Get pre-approved for a mortgage before starting your search. This will show sellers that you are a serious buyer and that you are able to finance the purchase of your home.
- Be prepared to make a strong offer. Cash buyers are often able to make higher offers, so you may need to be willing to go above the asking price to be competitive. (Of course, this purchase will be subject to an appraisal.)
- Waive contingencies if possible. Contingencies can make your offer less attractive to sellers, so you may want to consider waiving them if possible.
- Work with a local and knowledgeable real estate agent. A good real estate agent can help you navigate the market and find the right home for your needs.
Are you thinking about buying a property in the South Florida area? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, don’t forget to download the free Florida Home Search app for your smartphone or tablet. This app will give you the power of the local South Florida MLS in the palm of your hand.
