Cash Is King!

In April 2023, 1/3 of All Homes Were Bought with Cash

During the pandemic, there was a near frenetic homebuyer competition that encouraged cash buyers even when the interest rates were low. The seller got an unprecedented price and an offer with very little contingencies, especially no appraisal.

Cash is still king but now it’s because paying the higher interest rates are distasteful to those who can gather the resources and not get a loan.

Let’s get real—6-7% interest rates are the norm historically. Home prices that are now 25-40% higher than 3 years ago is not the norm. Hence, the problem.

Coloradoans like to think that all cash buyers are rich people from either the west or east coast and Texas. It’s mostly Californians, Texans, Arizonians, and Floridians who prefer the four seasons we all get to enjoy. I think they're moving because of hurricanes, flooding, some recently passed laws, lack of home insurers, and the relentlessness of sunny days spent at the beach. That must be it.

But cash is still a major presence in home purchasing in Colorado. Where is all that cash coming from?

Do They All Have Rich Parents?

No, they don’t but it is a source. Here are a few others:

• Selling assets

• Retirement accounts

• Family

• Investors bought nearly 26% of all homes in the US in 2022, pushing aside 1st-time homebuyers.

Some Good News

In the past few months, I’ve had two clients go up against cash buyers who offered over the asking price to make sure they got their dream house. The cash buyers lost, and my buyers won because the sellers liked their offer, and that they were young couples buying their first homes. Of course, they had to meet the offer price of the cash buyer and agree to close the appraisal gap if the appraisal came in lower than the contract price. Fortunately, they could do that.

Cash may be king but once in a while, it can be dethroned.

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