Cash deals are by no means dead, but they aren’t dominating the South Florida housing market the way they once did.
Sales without mortgages are happening less frequently as investors flee and traditional buyers gain easier access to financing, industry observers say.
In the second quarter, 46 percent of the home and condominium sales in Broward, Palm Beach and Miami-Dade counties went to cash buyers, down from 49 percent a year ago and from 62 percent in 2014, according to ATTOM Data Solutions, a research firm based in Irvine, Calif.
Cash sales peaked in the first quarter of 2011, when more than seven out of 10 deals didn’t involve a loan.
“The market has dramatically shifted,” said Mike Pappas, president of Keyes Co. in Miami. “Cash drove the market in the bottom-feeding and opportunistic times, but today we have a real market with real buyers, and they need mortgages.”
Investors descended on South Florida in 2011 and 2012 as the six-year housing bust was ending. With prices hitting bottom, bargain hunters with fistfuls of cash scooped up foreclosures and short sales for pennies on the dollar.
The competition was so fierce that some real estate agents were telling clients who needed mortgages that they had little hope of winning bidding wars for the homes. Sellers much prefer cash to financing because they know the deals are likely to close more quickly and with fewer hassles.
Today, though, with values rising and distressed homes in short supply, investors who remain in the market are all competing for the same few properties, said David Dweck, founder of the Boca Real Estate Investment Club.
“The days of the high-profit flip are over, for sure,” he said. “There will always be foreclosures, but they won’t be at the level we experienced in the past.”
During and after the housing bust, lenders tightened underwriting standards, making it difficult for first-time buyers and others to qualify for mortgages. But those requirements have gradually loosened as the housing market has recovered, allowing more buyers to take advantage of historically low interest rates.
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