Generally, about ten percent of real estate transactions are paid with cash. This year, the average in Massachusetts for the first three quarters is forty percent. It is this change that piqued the interest of both the Boston Globe and WBUR.
Jenifer McKim at the Boston Globe mentions some overlapping categories of cash buyers:
Very rich cash buyers purchasing deeply discounted high end condos.
Speculators buying distressed properties at deep discounts to flip or rent.
Investors buying rental property near colleges.
Over at WBUR, Curt Nickisch was working on a similar story this week. He also added this statistic to the mix:
In some Massachusetts communities, more than half of home sales this year are have been paid with cold hard cash. Those communities include Provincetown, New Bedford and Cambridge.
I am not sure how to categorize these cash buyers. Some are downsizers buying retirement properties, some are investors, and some are purchasing “kiddie condos.” (Parents buying condos for their student-children. This is a hybrid between investing and buying a second family home.)
Are you laying you cash down for real estate this year?
Why are cash buyers in the marketplace now?
Jenifer McKim writes:
They are turning to cash for various reasons, including tighter lending guidelines that have made mortgages less attractive, dwindling bank financing for investment properties, and a volatile stock market that has sent people looking for other places to put their money.
If you are lucky enough to have investments, where are you stashing them? Stocks? Bonds? Gold? Mattresses? Inman News posted a story by Truila that public perception continues to favor real estate as a long term investment. 80 percent of homeowners plan to buy another property in the future. 57 percent see real estate as one the best long-term investments.
Anyone willing to wrestle to bears regarding whether residential real estate is a long-term investment? How about, is it a good cash investment at this time? There seems to be demand out there, can you explain it?
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