Cash Sales Make Up Huge Percentage in Florida Real Estate Market
Cash residential sales have been skyrocketing. Thirty-one percent of U.S. home sales were for all cash in December of 2022. That’s the highest rate since January of 2011. The main driver of the surge is the high mortgage rates. Buyers are motivated to use cash because the can avoid high interest on a loan. Monthly mortgage payments have risen about 25% year to year due to mortgage rate increases throughout most of 2022.
Even though it’s now easier for buyers to use FHA loans, all-cash buyers are still in a financially advantageous position. They don’t need to pay the extra money that comes with interest on their mortgage, and they’re better able to take advantage of home prices coming down from their peak.
Redfin Corporation, which operates residential real estate offices in 95 markets in the United States and Canada studied the forty most populated metro areas in the U.S. “Overall, all-cash purchases were most common in Florida. Over half (52%) of West Palm Beach purchases were made in cash, followed by roughly 45% in both Jacksonville and Miami. This is far above the national average, noted above.
In the last six years, South Florida has consistently been one of the top places for homes bought with cash. The state’s tax incentives, permissive response to the pandemic, and political culture have accelerated the rush of home buyers who can afford to purchase property without a mortgage.
For example, according to the Washington Post: “The typical resident in the city of Naples is 66 years old and the median household income is $125,000, according to the Census Bureau’s 2021 American Community Survey. And the city has historically drawn a higher share of all-cash purchases because of the affluent clientele the area attracts …”
As for the state of Florida as a whole, Dec. 2022 year-over-year cash sale percentages were:
- Fort Lauderdale: 43.5%
- Jacksonville: 45.3%
- Miami: 45.0%,
- Orlando: 37.7%
- Tampa: 39.1%
- West Palm Beach: 52.0%
- National: 31.2%, up from 28.8%
Clearly Florida far outstrips the national average in residential all cash sales.
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