Rising Home Prices are Pushing Out Many Homebuyers
Home affordability is not all that is forcing buyers out of the market, as many buyers who have no problem affording payments are having difficulty even closing on a home. Buyers still face stiff competition from all-cash buyers, which make up a larger-than-typical portion of buyers.
In February, 35% of all purchase offers were all cash across the country, a 30% increase from the previous year, according to RealtyTrac. Where this money comes from depends on the market; in New York it comes from foreign buyers and Wall Street Workers, while South Florida’s all-cash buyers are South Americans purchasing real estate as a safe haven. Last month, more than 70% of all purchases in Miami were all cash.
This high number of all cash buyers are grabbing what little homes are available, while new construction remains below normal levels. Inventory is not loosening as many homeowners are waiting to list their homes out of fear that they will not be able to buy a new home.
Some economists worry that housing bubble trends are re-emerging as home prices continue their climb, including more buyers relying on adjustable rate mortgages and low down payments to afford a home, with more pressure to move to the suburbs for housing.