PORTLAND, Ore. (KOIN) – The share of homes purchased with cash hit an eight-year high in November 2022 and have been sliding since then, according to the real estate company Redfin.
A press release issued by the company in February explains trends for cash home purchases and shows the percentage of home sales in major metropolitan areas that were made using all cash. The data show cash purchases in Portland almost topped all other major West Coast cities in December 2022.
Across the nation in December, Redfin said 31.2% of home purchases were made in cash. This is down slightly from the 31.9% reported in November, and it’s up from 28.8% reported a year earlier.
According to Redfin, the share of homes bought with cash remains elevated above pre-pandemic levels because of the current high mortgage rates. If people pay for their home in cash, they don’t need to take out a mortgage and therefore, don’t need to worry about interest.
In February, the typical monthly mortgage payment was up about 25% from a year before.
Researchers say that the declining number of cash purchases reflects the interest rate, which peaked above 7% in mid-November for 30-year, fixed-rate mortgages. Rates dropped after that but climbed back up to 7% in early March.
“All-cash purchases are common in two notable scenarios: When mortgage rates are high and when the housing market is competitive, motivating affluent buyers to pay cash to entice sellers to accept their offer,” Redfin wrote in its news release.
Redfin used county records across 40 of the most populous U.S. metropolitan areas going back to 2011 to track all-cash purchases in each city.
In the data released from December 2022, Portland’s share of homes purchased in cash was higher than many other West Coast cities listed from California and Washington. The only two cities with a higher share of cash purchases than Portland were Anaheim and Riverside, Calif.
According to Redfin, Riverside, Calif. Was also the city where first-time home buyer purchases increased the most, where 26.3% of mortgaged home sales used an FHA loan in December.