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09/05/2013 - David Sicherman
Cash Continues To Be King As Investors Gobble Up Homes All Across Florida
Florida, once the epicenter of the real estate crash, is now leading the rest of the country in the number of all-cash home sales.

A report by the Irvine, Calif.-basedreal estate research company RealtyTrac found that in July a whopping 66 percent of home sales did not require mortgages. That number was even higher in South Florida, which includes Miami-Dade, Broward and West Palm Beach, which recorded 69 percent all-cash sales.

By comparison, nationwide all-cash home purchases accounted for 40 percent of all residential property sales in July, up from 35 percent in June.

The recent uptick in interest rates could also be contributing to a higher percentage of cash purchases as some non-cash buyers can no longer afford to buy, particularly in high-priced markets, Daren Blomquist, vice president at RealtyTrac, said in a news release.

Many of those buying for cash in South Florida, and particularly in the Miami area, are foreigners gobbling up condominiums. They see them as a safe place to put their money, especially if they come from countries undergoing political and economic unrest.

However, in the last year, many large investment funds also have come into the market focusing their purchases on buying single-family homes and then renting them out. Two of the larger funds that have been doing the buying in South Florida are The Blackstone Group out of New York and California-based Waypoint Homes.

Most of the buys have been short sales and the banks are happy to get them off their books, so when buyers come in with cash they are willing to sell, sometimes for as much as 20 to 30 percent less than they would had the home been sold to someone who had to get a mortgage.

While they have made up the bulk of the cash buyers, its not just institutional investors swooping in. There have been many stories of people who have been investing their life savings on a new home. Experts note that while this might be a good bargaining tool to get a deal done, they would be wise, once the sale is closed, to obtain a mortgage and start to pay yourself back.

While its been a boon for sellers, there has been a downside for buyers, especially those looking to dip their toes into the housing market for the first time. They are being squeezed out of the market, unable to compete. And, because homes are being gobbled up so fast, there are fewer available, which in turn leads to high prices.

In many cities, including Miami, sellers are bombarded by offers. Stories abound of people who have put in offer after offer, only to find they have been outbid.
How long the trend will continue depends on how quickly the inventory dries up. A six-month supply of inventory is considered normal. In July, Broward County had just a 3.5-month supply of single-family homes listed for sale, while Palm Beach County reported a 5.1-month supply. That means that if no more homes were to come on the market they would sell in that amount of time.

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