Paying cash for a home purchase is a wonderful thing – if you can afford it. It is just a matter of common sense that many consumers cannot pony up that much bank when it comes time to purchase real estate. Survey data shows that, across America, reality is living up to that expectation: cash home sales have been steadily falling. And yet, according to the CoreLogic real estate data provider, cash sales in the Philadelphia region seem to be on the climb.
The Philadelphia region accounts for eight counties in the metro area. In June, the last month for which data was available, cash sales accounted for 55.1% of all home purchases in that area. Compare that with the national average of 31.3%, and you’ll see a drastic difference. That’s not even to mention the fact that, a year ago, the Philly area number was 13.1% less. This is clearly a growing trend. The Berkshire Hathaway Home Services Fox & Roach Realtors HomExpert Market Report reports that there were 6,866 home transactions in June in the Philly area. The median home price for those purchases was $238,000.
The rest of the country saw a sweeping increase in cash home sales during the Great Recession, when investors accounted for a large number of home buyers and a full 46.5% of all home sales nationwide were made in cash. CoreLogic says that the national norm is about 25%. That’s not the case in the Philly area, say experts. In fact, the number of investor sales has dropped off drastically, leaving more “normal” consumers paying cash. Experts say that many of these sales are for purchases less than $100,00, when it is not only easier to come up with the cash for the purchase, but it also doesn’t make sense to pay a lot of interest to the bank on such a small amount.