Cash purchases of homes on the rise
About a week ago I was having a short conversation with @taskmaster4450 as result of writing this post.
His research was showing that over the past four weeks or so the number of mortgages have been dropping. My opinion was, that couldn't be the case because my friend who manages a title company has been seeing a record number of closings over the past year.
It turns out we were both right. Probably Taskmaster more so than me, but I'd like to hang my hat on the fact that I wasn't completely wrong.
You see, the number of closings has been skyrocketing over the past year or so. The thing is, the majority of these home purchases have been cash sales. That could certainly be the reason that mortgage applications have been on the decline, more people are buying with cash as opposed to taking out a loan.
My wife and I were camping with our friend again this weekend, and one night around the fire we happened to be talking about this subject. The friend mentioned the fact that so many people are doing cash sales.
She said that one of her realtor friends was intrigued by the fact that so many cash sales were taking place and he started doing some investigating to see what was happening. After doing some digging he ultimately figured out that it was all Covid money that is driving the cash sales.
Upon hearing that you might nod and say "ah, that makes sense", or you might be thinking "now wait a minute, there is no way a $4000 stimulus check is going to pay for a house". Trust me, I went through the same process in my head.
It turns out, Covid is definitely the case here, but it isn't the stimulus money. I think even the people who still don't believe in Covid can agree that lots of people have passed away over the last year. Whether from Covid or complications from Covid, or some other reason, they are no longer here. What happens to older people when they pass away? Their assets if they have any get distributed via their will or probate or whatever to their family, friends, etc.
That is where this influx of cash is coming from apparently. People who had their parent or sometimes parents die prematurely due to Covid have suddenly gotten their inheritances much sooner than they had expected. This has led to a huge boom in house sales paid full in cash.
Personally, I thought this was really interesting and it was a facet I had never considered before. I knew immediately that I needed to write a post about it, so here I am. It has a be a bit bittersweet for some of these people to think that they are buying their dream home thanks to such huge loss.
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@eos.detroit Staff Writer/BOID Team Leader
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