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June 24, 2010

Paying for the home with cash

People paying entirely in cash accounted for 25 percent of U.S. home sales in May, as the National Association of Realtors noted this week. That's more than the Baltimore region, as it happens -- but less than Baltimore alone, where investors congregate.

Investors aren't the only ones paying in cash, of course, nor are they always cash buyers. But local agents say cash deals are often struck by people who don't intend to live in the homes they're acquiring.

Thirty percent of the sales in the city were all-cash in May, according to Metropolitan Regional Information Systems. That's actually down considerably from the dead of winter, when most folks aren't spending time at the settlement table: In January, 42 percent of sales were all-cash.

I've got to figure that buyers rushing to beat the June 30 closing deadline for the home buyer tax credit -- which can't be used for investment purchases -- helped push up the number of mortgaged purchases in May.

For curiosity's sake, I checked out the city's stats in January 2000, before all the boom-and-bust craziness set in. Twenty percent of deals were all-cash that month. In May 2000, it was 23 percent.

So: Just how much cash are we talking about? I can't say, since the stats don't offer average prices by financing type, but I'm sure it ranges quite a bit. Fun fact: 55 city homes sold for less than $30,000 last month.  (By contrast, 12 sold for more than $500,000.)

Most of the "good time to buy or not" debate has focused on purchases for primary residences. Do you see this as a good time to buy a home -- or homes -- for an investment? Or do you think any time is good, depending on the individual deal?

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (2)
Categories: Real estate investing
        

Comments

I paid cash for a new car once but never a house. I wish! I remember being shocked as a kid when the house next to my parents sold for cash (around $200k and this was the 80s). A family who ran hotdog stands around the city bought it. I can remember thinking that must have been a lot of hotdogs!

Anyway, to answer your question, if I had the cash to buy an investment home now I would. I peruse the listings and see some houses that I see as good future investments...but unfortunately I am not one of those people with 6 figures laying around in the bank.

I wish I could buy a house with cash some day. Debt free is the way to go. We are busy paying off our home now and being debt free will be the best feeling ever. can't wait.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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