New Jersey 9th in Nation for Cash Sales on Homes [AUDIO]
When it comes to homes sold in New Jersey, about 45 percent were cash sales in July, up from 36 percent a year ago and above the nationwide average of 40 percent.
That ranks the Garden State ninth in the nation where most homebuyers pay cash.
“The recent rise in interest rates is pushing more people to cash sales. When we tracked the average interest rates on a 30 year mortgage on a weekly basis, against the cash sales, there is a definite correlation near the end of May into June when those interest rates started ticking up. About 30 days later, we started to see those cash sales spike,” said Daren Blomquist, Vice President at RealtyTrac.
“Rising interest rates are prompting more people to turn to cash and it’s also giving the cash buyers an advantage. It’s also much harder for people who are relying on financing for a mortgage to get that financing, so the market is tilting in favor of cash buyers.”
Buying a home with cash offers certain advantages.
“You aren’t contingent on financing and that puts you at the top of the line in a market right now where we’re seeing multiple offers on properties. If you have an all cash offer, you’re going to be at the top of the list in terms of getting that offer and winning that offer compared to people who are relying on financing that is contingent on certain factors. There are all sorts of hurdles that can trip up the approval of that financing,” said Blomquist. “As a cash buyer, you don’t have to go through that approval process which can be very tough in this market where financing is very tight and the lending standards are very high.”
Of the 45 percent of cash sales on homes in New Jersey in July, just over 3 percent were sold to investors, compared to 9.1 percent nationwide. Sales of those types of homes that are frequently conducted in cash, including bank-owned and short-sold homes, were less common in New Jersey than in the rest of the United States as well.
Florida topped the list of cash transactions for homes in July. Nevada, Maine, Michigan, South Carolina, Georgia, Arizona, Ohio, New Jersey and Hawaii rounded out the top 10.