Realtors in the region say many individuals who would have been priced out by Wall Street money a year ago are now able to step in, in particular buyers who made a profit selling property in more expensive parts of the United States.
”It’s mostly people retiring, or people who have sold something in other parts of the country and made a lot of money off it and are able to pick up something here for cash,” said Heather Kruayai, a Redfin realtor in Jacksonville, Fla., where the median home price is less than half that of California.
Roughly half of the offers Kruayai receives nowadays come from individual buyers.
Besides high mortgage rates, two major factors at play today help explain the jump in cash sales. Many places in the Sun Belt states remain relatively affordable compared to the Northeast and West Coast, giving people who sold there an edge — and cash. And institutional investors, burned by the sudden turn in the market last year, pulled back from once-hot markets.
Home sales dropped last year amid rising interest rates and prices cooled from pandemic-fueled highs. Investor purchases fell by a record 46 percent in the fourth quarter of 2022 from a year earlier, according to a report from Redfin.
In Atlanta, about 53 percent of homes sold last year were paid in cash, based on Attom data. Jasmine Harris, a Redfin realtor there, said she’s seen people who sold their California home for half a million or a million dollars and purchased an Atlanta property for about $400,000.
”They’re able to participate in a cash game that normally they would not have been able to,” she said.
Nowhere was the all-cash share higher than in Augusta, located about a two-hour drive east of Atlanta. The median sales price for a house in that city, at about $200,000, is well below the national average, according to Attom data.
”The large cash-sales levels in the Augusta metro could be connected, at least partly, to a relatively good home-flipping market,” said Rob Barber, chief executive at Attom.
Home to a military base, universities, and power plants, Augusta is a big market for rentals and has attracted investors hoping to profit from that demand, said Clay Turner, a broker and realtor in the area.
”The driver that started that craziness was a lot of Wall Street money,” Turner said. Today, investors are more focused on managing their properties than expanding them. ”That little flash in the pan in our market has settled.”
It’s not just in the South. In Las Vegas, the share of institutional investors dipped while all-cash sales continued to rise last year, Attom data show.
”We don’t see hedge funds purchasing anymore,” said Shay Stein, a real estate agent for Redfin in the area. ”I think a lot of investors, they’re wondering what the market is going to do.”
That creates opportunities for regular buyers, including those looking for a second home, a traditional driver of cash sales alongside investors.
Jere Singer, a recent cash client of Jacksonville realtor Kruayai, bought a beach house in northeast Florida in February. The 57-year-old business owner from Georgia had been looking for a vacation property for almost a year, and when she found the right place, she decided to tap her inheritance to close the deal.
”The conditions were not as great as far as prices and mortgage rates,” Singer said. ”But the location was, so I jumped right on it.”