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26% of Home Buyers Avoid Paying Interest on Loans-CASH IS KING!

 

NEW YORK – March 22, 2010 – More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country.

The share of home sales involving all-cash transactions was 26 percent in January, up from 18 percent a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions.

Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.  

downpaymentassistanceNAR data also show a pickup in investment activity. Home purchases made by buyers identified as investors climbed to 17 percent in January, up from 15 percent in December and 12 percent in November.

“We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned,” says Mark Fleming, chief economist at First American CoreLogic. “It’s a different type of investor going after foreclosed properties and expecting to hold on for longer time frames.”

Many investors say they’re financing their purchases with cash on hand, rather than borrowing. Evan Spinrod of San Francisco bought three rental properties in November and February and now owns 21 in four states. The rent he collects gives him an 8.5 percent annual return on his investment. Some of his homes are worth about $165,000.

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Written by Rae Catanese, Realtor

Licensed Realtor since 2002, Tampa Bay’s own Rae Catanese regularly gives expert advice and insider tips about the Tampa Bay real estate market via her blog, The Tampa Real Estate Insider. If you are thinking of buying or selling a home in the Tampa, St. Petersburg or Clearwater areas-then this blog is for you. I typically post articles once a week. To make sure you don’t miss my newest posts, you can subscribe here! Have a real estate question? Email me here!

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2 Comments

  1. Rae Catanese

    Carol,
    I recently started working with a buyer who wanted to purchase land. He was told that you need 40% down. I’ve also heard the banks aren’t doing construction loans anymore. I did some research, and found out that builders aren’t offering financing either. This is why land isn’t selling now! You may want to try Regions Bank. If I can help further, please let me know.

  2. Carol Tufts

    Well, I am marketing (by owner) two oversized, heavy frontage lakefront lots with loads in East Pasco but as you said, I believe my buyer has to have the cash. What bank will finance land now? I am reluctant to offer financing and wondered about hooking up with a builder to offer a package deal. Any thoughts?

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