According to the real estate analysis firm Zillow, the number of cash real estate purchases has been dropping, even in Detroit, Michigan. This trend of cash purchases and sales being less prevalent can be seen all over the nation. It may be a sign that investor activity is fading and traditional home purchases are picking up.
During the first part of 2014, 53 percent of those residential real estate transactions were paid with cash. This represents a decline of about 70 percent as compared to the first part of 2011. At this time though, Detroit trails only the Miami-Fort Lauderdale area, Cleveland and Tampa.
When looking at bottom-tier-priced real estate transactions in Detroit, cash purchases were still relatively high at 83 percent. This means that Detroit only trails Miami-Fort Lauderdale in bottom-tier-priced cash purchases. The rate in that part of the country is 84 percent.
In Detroit, traditional lenders have not been overzealous to approve home loans for properties under $50,000 and/or for properties required repair. However, numerous homes in Detroit fit this description. Indeed, in areas like Highland Park, Harper Woods, Hamtramck and Detroit, average home sale prices are reported to be a mere $15,000. Still, the median sales price for homes in Metro Detroit overall has risen by 24 percent and in May, it was listed as $138,000.
The fact that more purchases and sales of Michigan homes are being completed by traditional means as opposed to cash could be a positive sign for the United States economy. Indeed, it means that banks may be approving more mortgages, and there are more suitable and interested buyers available among average income demographics. Michigan residents interested in purchases and sales of real estate property may wish to employ an attorney in addition to a real estate agent while completing a real estate transaction and applying for a bank loan. Professional assistance can help an individual bypass many pitfalls during the process of completing a real property transaction.
Source: mlive.com, “Rate of homes bought with cash dropping in U.S. metros, including Detroit” No author given, Jun. 19, 2014