Cash Transactions in Charlottesville and Albemarle – 2023 Edition

Cash, not cash? A bit of local perspective on cash real estate transactions in the Charlottesville area.

22901 cash transactions; image courtesy of Washington PostThe Washington Post just published an interesting story about cash real estate transactions. It would be more useful if you could go back and see the percentage of cash transactions over the past five years.

In 2018, I wrote:

Last year (2018), same timeframe, 1140 had sold. So a fairly significant increase in volume. But the one reason I pulled this number for the pod was that this year, of that 1278, 310 have sold with cash. And last year, almost 300 had sold with cash, so fairly consistent. That’s the one data point in the MLS in that house sold perspective that I think is fairly accurate. The other ones between ARMS and fixed-rate mortgages and stuff are not always properly selected.

Purchases in Charlottesville have been about a third of the market for several years.

And just because a transaction is marked as a “cash” transaction does not mean that it is actually “cash” — meaning a wire from buyer’s account to the seller for the purchase price.*
* (it wouldn’t work that way, anyway, as the buyer would wire to their attorney, who would wire to the seller’s attorney, who would wire to the existing mortgage holder if there was one, and the remainder to the seller)
I’d say that at least half of my “cash” clients have gotten loans.
Especially when rates were sub-4%, I had clients who would guarantee that they could pay cash if necessary, but many if not most ultimately got loans.

A Buyer putting forth a “cash” offer:

a) eliminated financing/appraisal contingencies and often (but not always) out-competed offers with financing contingencies.
b) stated they had the potential to be financially liquid if they had to be. (but they really didn’t want to be).
c) often created headaches because in reality, lenders were still just as involved as in a pure cash transaction. We even developed clauses that stated explicitly that if the buyer was putting forth that they were a cash buyer, and still got a loan, they were obligated to close on time as the seller likely had a purchase dependent on the first transaction closing on time. Dominoes are everywhere.
d) usually was fine.

Keep in mind also that ~40% of American homeowners don’t have mortgages

“About 37 percent of households in the U.S. are living without mortgages.

The share of homeowners paying off their mortgages has increased by 5.5 percentage points over the past decade, according to Bloomberg, citing data from Zillow. This is in part due to an aging population of homeowners, as younger Americans tend to wait longer to buy property thanks to factors like student debt and increasing living costs. The trend could reverse as younger people start to enter the real estate market.”

I find that often, when I make comments on local social media or Twitter, it’s useful to capture those thoughts here. God help me trying to find a random Reddit or Twitter comment.

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