The number of homes purchased with cash has risen to its highest levels since 2007, according to data from national property data base Attom Data Solutions LLC — and purchases made with loans popular with first-time buyers continues to drop.
Across the country, cash purchases accounted for 34% of all single-family home and condo sales in the second quarter of 2021 – the highest level since the first quarter of 2015 and up from 20.6% of home sales during the second quarter of 2020.
Meanwhile, homebuyers using Federal Housing Administration loans, often used by first-time homebuyers because they require smaller down payments, dropped to just 7.9% of all home purchases, the lowest levels since the fourth quarter of 2007, according to Attom, and down from 9.1% in the first quarter of 2021 and from 12.9% during the second quarter of 2020.
In Georgia, about 62.1% of all homes sold during the second quarter of 2021 were purchased with cash, a 147% increase over the same time in 2020. That is also up from 39.5% of purchases in cash from just a quarter earlier, in the first few months of 2021. Meanwhile, homes purchased with FHA loans accounted for just 1.3% of home purchases in the second quarter, down from 16% during the second quarter of 2020. In Michigan, 58.4% of home purchases were made in cash, while 52.5% of home purchases in New York were made with cash, according to Attom. Both posted a 115% increase over the same time last year. Meanwhile, the percentage of homes purchased with FHA loans both dropped 50% or more.
The stark disparity in cash purchases is highlighted in metro areas across the country. In Buffalo, New York, cash purchases accounted for 71% of all home sales, a 170% increase over the second quarter of 2020. FHA purchases were just 4%, down from 12.4% during the second quarter of 2020.
In Detroit, cash purchases accounted for 68.1% of home sales, up 141% over the second quarter of 2020, while FHA purchases were just 4%, down from 12.4% over the same time. The top 10 metro areas for cash purchases as a percentage of overall home sales were:
Buffalo-Cheektowaga-Niagara Falls, New York: 71%
Detroit-Warren-Dearborn, Michigan: 68.1%
Salisbury, Maryland: 67.5%
Macon, Georgia: 64.9%
Atlanta-Sandy Springs-Roswell, Georgia: 64.2%
Athens-Clarke County, Georgia: 60.7%
Flint, Michigan: 58.2%
Columbus, Georgia/Alabama: 58.1%
Kansas City, Missouri/Kansas: 57.3%
Youngstown-Warren-Boardman, Ohio/Pennsylvania: 57.3%
Meanwhile, the metro areas where cash represented the smallest share of home purchases included Myrtle Beach, South Carolina, with just 8.3% of all sales, Lexington, Kentucky, with 16.5% of all sales, and Washington, D.C., with 16.7 of home sales.
Areas with 200,000 or more people with the highest level of FHA sales included Lakeland, Florida, at 24.4% of all sales, Corpus Christi, Texas, with 21.4% of sales and Utica, New York, with 19.6% of all sales.
The high number of cash purchases comes as what has been a red hot housing market spurred in part by Covid-19 has begun to shift. Prices are beginning to slip, with 4.7 of listings for the four weeks ending Aug. 1 seeing price drops, according to real estate firm Redfin, compared to 3.7% during the same period last year.
There are other signs the market might be turning, with new home listings surpassing prepandemic levels earlier in July, according to reporting by Ashley Fahey, real estate editor at The Business Journals.
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Home sellers are also still seeing big profits from the sale of their homes, although the return on investment slipped in the second quarter, according to a separate study from Attom Data Solutions LLC.
Meanwhile, Covid-19 has changed how homes are marketed and listed. In 2019, the most popular home features and amenities in home listings were granite countertops, hardwood floors and stainless steel appliances. But now, after 18 months of a pandemic, the top amenities listed in homes for sale were garages, walk-in closets and full bathrooms, reflecting the changing desires of potential buyers.
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