In first quarter 2014, 43% of home sales across the country are settling in cash deals, according to MarketWatch. Up from 38% last year, the all-cash trend in residential housing sales appears to be rising.
Local multiunit homes such as condominium complexes and retirement communities also report up to 60% cash sales, especially in low-inventory locations.
Surprisingly, the trend seems to buck prevailing opinion about real estate and the economy. Who’s got the money these days to pay cash in full for their homes? Not surprisingly, it’s the people with money.
The five top markets for cash home sales were in the Florida cities of Cape Coral-Fort Myers , Miami, Sarasota, Palm Bay, and Lakeland. Who are the folks flocking to Florida who have money enough to buy homes in cash? They’re the retirees seeking homesteads in a place with no state income tax. They’re the folks who made their money by earning it. They’re the self-made men and women desiring to live out their lives on savings, not on government dependence.
Where there are homes selling hot in a particular area, there are realtors making a good living selling those homes. Then, there are the movers, shippers, and support businesses that get the folks there. After that, there are the businesses that clothe, feed, and supply the needs of the newly arrived populace. After that, there are the medical and professional services to help it thrive. The economy of the area booms.
The trouble with this rosy scenario is that this is the baby boom population, which grows older and aged with every year that goes by. When this generation dies out, the self-made men and women who made their money by earning it will be gone. No more boosting regional economies by the folks who made their own way.
We need to ask whether those hot-selling cash home sales can continue when the future home buyer is currently unemployed, underemployed, or on welfare, depends on sustenance from food stamps, has no job prospects, perhaps never had, opted out of participation in the labor pool, and has no savings.
So, if government is looking to improve the nation’s economy, why hasn’t it thought about lowering taxes, deregulating businesses in boom towns, allowing employment to soar in resource-rich regions, and getting out of the hair of hard working people?