Buying a house? Here's where all-cash deals are most competitive

KEY POINTS

• All-cash sales now make up about 36% of the market, according to realtor.com.
• Some markets are seeing a much lower share of cash buyers, such as Denver; San Diego'; Oakland, California; and Washington, D.C.
• "Cash sales likely increased on the high end because there was just more cash to go around among high-end buyers thanks to the performance of equity markets in this period," said Danielle Hale, chief economist at realtor.com.

Even during the usually slow holiday season, the housing market is hotter than ever this year.

Low supply and incredibly high, Covid-induced demand have made buyers beyond competitive and sellers particularly picky. As a result, all-cash deals, which sellers favor, are rising in certain regions and at certain price points.

All-cash sales now make up about 36% of the market, according to realtor.com. That is only a very slight rise overall from last year. Yet cash sales are climbing more dramatically in the Northeast and West, up 3 and 2 percentage points, respectively. It is happening despite the fact that mortgage rates have set record lows 14 times so far this year.

"This is likely a reflection of who's buying," said Danielle Hale, chief economist at realtor.com. "While investors (who are more likely to use cash) are active in the market, non-corporate buyers, likely owner-occupants are a bigger chunk of buyers in this period, and that affects the overall cash share."

The highest share of all-cash sales is in Nassau County, New York, on Long Island, according to Redfin. Nearly half of sales there are all-cash. Then the next six top markets are all in Florida, including large cities like Miami, Tampa, Fort Lauderdale and West Palm Beach. Atlanta and Tucson, Arizona, are also having a higher share of cash buyers.

Some markets are seeing a much lower share of cash buyers, such as Denver; San Diego; Oakland, California; and Washington, D.C.

There has also been significant change in all-cash behavior by price point. All-cash sales jumped 6 percentage points at the lowest price tier ($0-$100,000) where they make up 65% of the market and 3 percentage points at the next rung up ($100,000-$200,000) where they make up 36%, according to realtor.com.

Investors have always favored cash but are doing so even more this year. They're usually on the low end of the market.

The middle-price tiers stayed about the same, and cash sales actually dropped in the $750,000-to-$1 million range. Then at the very top of the market ($1 million-plus) another jump in cash, with that share rising to 47% of all sales.

"Cash sales likely increased on the high end because there was just more cash to go around among high-end buyers thanks to the performance of equity markets in this period," said Hale. "While the records have now been surpassed, the market was notching new highs in this period, and this tends to boost high-end home sales."

High-end buyers may have the means, but for the rest, buying with cash is certainly not easy, especially given today's fast-rising home prices. Some buyers are turning to family and friends, borrowing the cash to seal the deal and then taking out a mortgage to pay them back once the sale is closed.

There are also several new companies looking to leverage the competition in the market by helping buyers make cash offers. To name a few, Ribbon, Accept.inc and Reali all offer different business models with the same goal of giving buyers the opportunity to make an all-cash offer.