According to a Redfin report, the proportion of American homebuyers purchasing their home with cash, avoiding a mortgage, increased to 31.9% in October 2022, the highest rate since 2014.
Cash purchases (defined as no mortgage information on the deed) started to increase in 2021. At that time, home buyers were using it to gain an edge in the competitive pandemic market.
Cash offers can be seen as more appealing than a standard offer with a down payment.
In a competitive market, a seller is likely to take a cash offer over other offers because they don't have to worry about a buyer backing out due to financing being denied.
In addition to this, homes purchased with cash can close faster if that's what both parties want.
The real estate market has cooled off somewhat, but with mortgage rates increasing, homebuyers are now using cash to avoid large interest payments on a mortgage.
Where are Ohioans paying cash for homes?
Outside of Florida, buyers in Cleveland and Cincinnati are more likely than in any other place in the country to pay for homes with cash. In fact, 47% of homes purchased in Cleveland and 43.9% of homes purchased in Cincinnati last October (the most recent month for which data is available) were purchased without a mortgage.
Why is cash purchasing so popular in these areas? As the report indicates, Ohio's affordability makes it a prime candidate for this type of home buying:
Cleveland and Cincinnati are quite affordable, with median home prices well below the national average, making it more feasible for people to come up with cash.
If buying a home with cash isn't within your reach, rest assured there are advantages to mortgages. One of the biggest is that they leave you with more money available in case the home needs renovations or other events arise.
In addition, a mortgage gives you more freedom to make other investments, creating a more well-rounded portfolio.
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