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Are All-Cash Home Purchases Keeping Prices Afloat in This Interest Rate Environment?

Are All-Cash Home Purchases Keeping Prices Afloat in This Interest Rate Environment?

One way to forget about rates, increase your likelihood of owning the home all while making the Fed’s job harder…bring cash to the closing table!

With interest rates recently “hockey sticking” and inventory remaining low, a significant percentage of homebuyers are continuing to snap up properties with all-cash offers. In fact, last quarter such purchases reached an eight-year high for single-family and condominium sales.

A recent report from the Attom Data Solutions showed that all-cash purchases continue to represent a sizable slice of home sales, accounting for 35.5% of all transactions in the third quarter of 2022.

That’s a near 2% jump from the same time last year, Attom notes, even though it’s down just slightly from Q2 2022.

Attom’s Rick Sharga predicts that percentage will continue to climb.

“Going forward if you’re able to buy a property with cash, you’re in a position of extreme competitive advantage over somebody who’s going to have to finance a purchase with mortgage rates at 6 or 7%,” Sharga recently told

Money Magazine notes that the all-cash trend began with the onslaught of Covid.

“All-cash offers surged in popularity during the early days of the pandemic, when a crush of demand and a shortage of inventory forced potential buyers into fierce competition,” Money stated. “It was common for homes to sell well above their asking prices, too.”

Of course, all-cash purchases are not a possibility for most (although in Nassau County and West Palm Beach cash purchases are more common than not), and Redfin data clearly illustrates that they are largely a move made by the affluent.

Places with more affluent residents are seeing the greatest number of all-cash purchases, with Florida metros claiming half of the top ten list of places with the greatest percentage of all-cash transactions.

  1. Nassau County, New York: 66.5%
  2. West Palm Beach, Florida: 56.4%
  3. Jacksonville, Florida: 45.5%
  4. Milwaukee, Wisconsin: 45.3%
  5. Fort Lauderdale, Florida: 43.3%
  6. Orlando, Florida: 42.5%
  7. Atlanta, Georgia: 42.4%
  8. Cleveland, Ohio: 42.1%
  9. Charlotte, North Carolina: 41.8%
  10. Tampa, Florida 41.3%

But cash purchases are not solely being made by the wealthy.

Money Magazine stated that while all-cash offers are certainly a luxury, they “aren’t just coming from the super-rich or Wall Street investors. While those are part of the equation, many cash offers come from regular consumers — just average Joes down the street.”

Money said that buyers who sold an existing home for a serious profit thanks to significant price appreciation suddenly found themselves with the means to throw down an all-cash offer on their next home. And in other situations, buyers worked with a growing number of companies that have cash-offer programs designed to help homebuyers edge out the competition by helping them make an all-cash offer, for a fee, to be sure. So, while these purchases are recorded as cash, they are actually not truly cash as the buyer owes a fee or interest rate to the company that “gave” them the cash.

And then, of course, institutional investors are still a part of this all-cash shift.

Redfin noted that real estate investors bought a record share of properties in the fourth quarter of 2021, and since then their activity has remained strong, surpassing pre-pandemic levels. What’s more, nearly three-quarters of investor home purchases are made with cash – a figure that is certainly driving these recent all-cash highs.

Interestingly, some attribute remote work for contributing to the all-cash trend. A recent article by National Mortgage Professional on the topic suggested that the flexibility of the pandemic-inspired work-from-home life has given people the chance to make an all-cash offer, because “it allowed a record share of homebuyers to relocate from expensive to more affordable parts of the country.”

Now, with the pandemic behind us (according to some politicians), home price growth slowing and remote work here to stay, the housing market will need to time adjust to these new factors and react to how they play against inflation and rising interest rates. Will more people find ways to throw down cash offers to avoid paying nearly 7% interest? Maybe, especially if those cash-offer startups expand their reach and help them do it!