Marketplace has a new podcast for kids, "Million Bazillion!" EPISODE OUT NOW

In real estate, cash is king

Nancy Marshall-Genzer Jan 12, 2016
HTML EMBED:
COPY

In real estate, cash is king

Nancy Marshall-Genzer Jan 12, 2016
HTML EMBED:
COPY

Last November, 38.1 percent of single family home and condo sales were all-cash, up from 29.8 percent in October, according to a new report from RealtyTrac.

RealtyTrac vice president Daren Blomquist said the uptick in cash sales is temporary, caused by new federal rules that change how the costs of a loan are disclosed.

Blomquist said those changes slowed down the loan process, and that meant “cash buyers have an even bigger leg up on finance buyers than they did before.”

But Blomquist said once everybody gets used to the new rules, cash sales will slip back to around 30 percent, the norm since 2000. But there’s a caveat, “In terms of global economic stability,” he said.

That’s a big caveat. More and more wealthy foreigners are paying cash for U.S. real estate, as a hedge against their own tanking economies. Some economists say that’s not about to stop.

“I don’t see any bottom to the Chinese meltdown,” said Anthony Sanders, a distinguished professor of real estate finance at George Mason University. “So I think this could, actually, very easily last through the year.”

But mainly on the coasts, in cities like Los Angeles, New York and Washington.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.