Across the state, 66 percent of home sales were cash, compared with the national rate of 40 percent. One expert called Florida’s rate “astounding.”
With one of the nation’s highest foreclosure rates, South Florida has a large supply of bank-owned properties. Lenders aren’t interested in waiting for traditional buyers to qualify for mortgages, preferring instead to sell to investors paying cash.
And that has virtually shut out entry-level homebuyers.
“That’s where all the action is,” said Lex Levinrad, founder of the Distressed Real Estate Institute, a Deerfield Beach-based club for investors. “The banks have an urgent need to get these bad loans off their books as soon as possible. They’re willing to sell for 30 percent less to a cash buyer rather than waiting for a buyer with a mortgage.”
Much of the cash buying in South Florida is from foreigners who view condominiums as safe investments. In the past year, large funds have entered the region, buying single-family homes and renting them out for a year or longer. The Blackstone Group of New York and California-based Waypoint Homes are two of the larger funds buying in Broward and Palm Beach counties.
Some industry analysts once feared that a so-called shadow inventory of homes would hurt the housing market. But David Dweck, founder of the Boca Real Estate Investment Club, said there are enough cash buyers here to support any excess supply of properties. “Without a doubt,” he said. “Without a doubt.”
Cash sales made up 57 percent of Florida’s home sales a year ago and 61 percent of all sales in June of this year, compared with the 66 percent reported in July, according to the report released today by the real estate research company RealtyTrac Inc.
“That’s astounding,” RealtyTrac Vice President Daren Blomquist said. Nationwide, only Nevada (64 percent) and Maine (60 percent) came even close to Florida’s tidal wave of cash-only deals.
Among Florida’s metropolitan areas, the South Florida metro area — covering Palm Beach, Broward and Miami-Dade counties — was second only to Brevard for cash deals.
One factor tipping the scales in cash buyers’ favor has been the tightening of mortgage requirements following the easy-lending era that preceded the 2007-09 recession.
Another key shift noted in RealtyTrac’s July report was a strong rebound in the number of short sales — closings with sales prices below the balances still owed on the properties’ mortgages. During the housing-market meltdown and the Great Recession, distress sales had dominated the South Florida housing market before receding in the past year or so as prices rallied.
In July, though, short sales accounted for 30 percent of all home sales in the state and 32 percent in the South Florida metro area — double to triple the rate of short sales reported a year ago.
Meanwhile, regular foreclosures have held steady at about 10 percent of all sales throughout Florida during the past year. In July, compared with a year earlier, distress-sale prices in South Florida were up 12 percent to $106,450. Conventional-sale prices rose 19 percent in South Florida from a year earlier.