More Houses are being Bought with Cash
As reported by Nick Timiraos of the Wall Street Journal, more than half of all houses bought last year and so far in 2013 have been bought with cash rather than mortgage financing. Indeed the number of houses bought with cash has jumped tremendously since the Great Recession.
About 20 percent of all houses were bought with cash pre-crash but now that percentage has more than doubled. Before the recession hit, about 67 cents of every dollar of homes sold was financed by a mortgage, but now that figure has shrunk to only 44 cents.
The aggregate mortgage value pre-recession was about $1.5 trillion but over the past two years has only been valued around $500 billion each year. About 40 percent of this decline is attributed to the rise of buying houses with cash. It is unclear who is responsible for all these cash home purchases but analysts posit that is it an amalgamation of investors, foreign buyers, and wealthy homeowners who do not want to put up with the hassle of getting a mortgage. The analysis ends with a prediction however that the aggregate mortgage value will go back up to $750 billion next year and to $1.1 trillion by 2016.