USA: 60 percent of homes sold in 2013 went to all cash buyers

Stacy Summary: This is what interest rate apartheid looks like.

USA: 60 percent of homes sold in 2013 went to all cash buyers

There was an odd sort of myth floating around the market that the cash buyer crowd was somehow a tiny portion of the market, like a drop of water in the vast ocean of home buying. This delusional dream played into the fantasy that this housing market was naturally rising because of overall household demand when in reality, it is being driven by investors leveraging the artificial low rates created by the Fed. The flood of money from Wall Street has been large. Even anecdotally, it was apparent that cash buyers were driving the market given that housing is a margin driven market. That is, at any given time only a small portion of all homes are on the market for sale. However, an analysis by non-other than Goldman Sachs shows that 60 percent of all 2013 home sales are being driven by cash buyers. That is, the middle class is largely being pushed out of this game and has become the minority in this real estate market.

11 comments on “USA: 60 percent of homes sold in 2013 went to all cash buyers
  1. BankingThiefs says:

    Spainish government has news for all those who thought they could escape the global warming propaganda (energy) tax by investing in solar energy…

    http://www.reuters.com/article/2013/08/14/us-spain-energy-idUSBRE97D0FX20130814

    ALL YOUR BASES (Solar Panels) BELONG TO US!

  2. Palantír says:

    In other words, US is going back to old school England’ish with landlords and tenants on large scale.
    The rich is not only owning the business and industry but taking back the land the proletarians ‘freed’.

  3. Nat says:

    Is it mainly because all the mortgaged home buyers are underwater so can’t sell up without realising big losses?

    Those cash buyers, some of them might actually be people who were sensible in some way in not getting caught up in the bubble.

    I guess also it includes cash buyers who buy many houses in Detroit for example for just a few thousand..

    Could also be a reflection of banks secretly moving housing stock off their books for cash?

  4. Nat says:

    @BankingThiefs

    It shows that the power companies OWN the Spanish government. Even to the extent that they are forcing the government to abandon their position at the forefront of a new and growing industry of renewable energy.

    Imposed by decree, the reform aims to raise money for tackling a 26 billion euro debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.

    So the power companies are saying to the people of Spain:

    “Until you pay us our debt, you must be a slave to us and buy our power. And you will be punished if you even try to go off grid. Fuck Global Warming, we OWN YOU!”

    That the Spanish government is bowing to this and imposing this is the scandal I guess. But that’s what we’ve come to expect of politicians – they bow to the guys with the money, because they’re hoping for a nice job after government.

    If this was South America, it would be acceptable to tell the power companies to fuck off and nationalise them. Unfortunately, dogma in Europe prevents that (until there is complete “free market” collapse).

  5. Ditto says:

    Would be very interested to see the figures for the UK…..

    Anyone know if there available / published

  6. @Nat – no, it’s not prudent savers buying homes in cash, it’s mostly private equity and hedge funds; and a few corrupt Chinese party members who can get the cash out

  7. Jimbo says:

    This is happening in London where 70% of new home sales are going to foreign buyers. I haven’t studied the numbers, but my guess is that this is a rotation out of cash and bonds and into tangible assets. If collapse theory is correct, this rate of rotation will increase until the Dollar and Pound et al are worthless paper (which we all know are worthless paper anyway).

  8. Bruce says:

    BankingThiefs,
    That’s absolutely shocking, that Spain article.

  9. Mini US says:

    Chinese with their cash filled suitcases.
    Same here in Mini US ;-)

  10. @Jimbo – yep; I read it’s actually 75% of new build in London is sold to foreign buyers, many of these property developers don’t even advertise domestically, they go straight to the cash source – China and central Asia / Eastern Europe – all the ‘stan’ countries; obviously, this cash is money laundering in a manner; it’s taking huge amounts of wealth out of their own economies and putting it somewhere that it will be difficult to ever get back

  11. Nat says:

    @Stacy Herbert

    “@Nat – no, it’s not prudent savers buying homes in cash, it’s mostly private equity and hedge funds; and a few corrupt Chinese party members who can get the cash out”

    Oh well, it was a long shot…

    “@Jimbo – yep; I read it’s actually 75% of new build in London is sold to foreign buyers, many of these property developers don’t even advertise domestically, they go straight to the cash source – China and central Asia / Eastern Europe – all the ‘stan’ countries; obviously, this cash is money laundering in a manner; it’s taking huge amounts of wealth out of their own economies and putting it somewhere that it will be difficult to ever get back”

    I heard the same thing on the radio, most of new-build flats are bought AND SOLD before they’ve even been finished. No concern with what the finished flat is like, no need for anyone to move in ever. Just a place to park money for a while, then sell on to the next person who needs to park money. Good if you’re an estate agent getting 4% each time.

    Then government can tick off the number of new homes built and, because of rocketing prices, they can also still call them “affordable homes” as it falls within their own definition of 80% of average value of the area (or something like that).

    There’s a Zombie tower of flats near me – proclaims all sold yet still completely empty. The block was built as a finance scheme for a concert hall underneath – purely for making money rather than providing homes. Shame as it knocked down a 60′s brutalist firestation with some flats above which I could get into and walk around in – they had some really cool features.

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