While most homes in the United States are purchased with mortgages, that’s not the case in a few key markets: in June, the majority of real estate transactions conducted in Nevada, New York, Vermont, and Florida were done in cash.
According to CNN Money, using data from the real estate tracking site RealtyTrac, all-cash deals made up 58% of home purchases in Nevada, 57% in Florida, 51% in New York, and 80% in Vermont in the month of June. The market Atlanta also had a substantial number of cash-only deals, at 42%. These percentages stand out to real estate experts and economists because they’re so much higher than the national average of home sales conducted in cash, which is 30%.
The reason that certain areas of the country are seeing so many mortgage-free deals varies. In states like Florida and Nevada, which are still recovering from the housing crash, investors seem to be swooping in and buying up foreclosures in hopes of flipping them for a profit. Because prices are low and the potential for a substantial return is high, these buyers have more incentive to reach into their pockets than to turn to a bank. This phenomenon is also being seen in Atlanta; although cash-only purchases are less common in that city than in Florida or Nevada, it’s a major draw for investors, with this type of buyer responsible for 27% of sales.
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The situation in New York is quite different; because home inventories are so low in and around New York City, it seems that buyers are forgoing financing in order to make their bids more enticing to sellers.
While these cash purchases might benefit the buyers and sellers, some in the mortgage industry worry that business will suffer if this trend persists, especially in states with especially high numbers of cash deals, such as Vermont.
Would you ever buy a home without a mortgage?