So far this year one third of the homes purchased in Massachusetts were bought in cash-- mortgage free. In an economy that is known for its down market- why are we seeing this? Possibly because the only people who have enough assets to buy in this economy are the ones who would buy in cash anyway? Or maybe it's a reaction to the new, firm, and constricting guidelines surrounding mortgages. Or perhaps it's the volatile stock market that has investors searching for more tangible and stable ways to invest their money. "Brian Bethune, an economist at Amherst College, said wealthy buyers may want to take advantage of deep discounts in the high-end market rather than watch their money flounder in stocks and bonds." (Source).
Whatever the reason, the trend is not isolated to Boston. "Across the nation, about 31 percent of all August home sales were in cash, the second highest percentage since February, when it reached nearly 34 percent, according to a survey by the Maryland-based trade publication, Inside Mortgage Finance." (Source).
Many people are buying in cash: investors picking up run-down properties to either flip or fix up and rent, foreign buyers, empty-nesters that are down-sizing and moving into the city who can buy a condo with the profit from the sale of their suburban home, or wealthy parents buying their kids a condo to live in while they go to school in the area.
Regardless of the reasons, this is atypical and remarkable percentage of cash purchases, and an impressive increase after 22% in 2010 and 20% in 2009.
The story was published on the front page of the Boston Globe and can be found here: Source.