What Percentage of Homebuyers Pay Cash? It Depends on the Market

Factors affecting the percentage of cash buyers in a market

What percentage of homebuyers pay cash in your city will depend on variables, including housing supply levels and the popularity of your location. The desirability of your individual property and whether you’re able to rouse a bidding war can also impact whether you attract a cash offer.

And you also have to consider the types of buyers in your area. Are they supported by familial wealth or cash from a previously owned property? Or are they mostly first-timers who will likely use financing to make their purchase? Do you have a number of active instant buyers (iBuyers) in the area who purchase homes with cash?

Let’s review these factors in further detail and how they may impact your ability to generate a cash offer on your home.

1. Location, climate, and affordability

Some markets have seen a recent influx of cash offers driven by remote workers relocating from expensive to relatively affordable cities. These buyers use the proceeds from the sale of their previous (and often pricey) home to pay all cash in a cheaper market.

This trend has been seen prominently in the state of Florida, where the percentage of cash sales in cities such as Naples and North Port reached a whopping 60% and 56%, respectively.

Earlier this year, five of the top 10 metro areas with the largest share of cash home sales were in Florida, according to Axios. Given their fantastic weather, Sun Belt markets are often popular among investors or people buying second homes for vacation or retirement, making them cash-heavy. Although vacation-home buyers and investors make up the majority of all-cash buyers, primary residence buyers are actively using cash as well, according to NAR.

In contrast, you may not see the same volume of cash buyers in certain areas of California due to the exorbitantly high price of housing. In Los Angeles, cash sales made up just 22.7%, while in San Jose, they accounted for only 18.2%.

2. Mortgage rate trends

When mortgage rates climb, borrowing becomes pricier, which often shifts the dynamics of the housing market and increases the percentage of cash buyers. Here’s why:

• Higher rates mean bigger monthly payments: As borrowing gets more expensive, some buyers can’t qualify for loans or find themselves priced out of their desired homes.
• Buyers would avoid interest, as much as possible: Those who can pay outright skip high interest rates entirely, strengthening their offers and saving money in the long run.
• Sellers prefer cash deals: Cash offers close faster, don’t rely on loan approvals, and are less likely to fall apart, making them more attractive to sellers.

As mortgage rates rise, many buyers turn to cash as a way to sidestep high interest and stay competitive. It’s a big shift that influences who’s buying homes and how deals get done in a challenging market.

3. Wealth of local buyer pool

The pandemic spurred some unusual migration patterns, skewing cash sales higher in areas with more affordable housing as workers concentrated in particular cities suddenly spread out. But luxury homes in expensive areas may still easily sell for cash given the wealth-levels of the buyers who can afford them.

Realtor.com reports top five states that “rich millennials” are moving to include Florida, Texas, Colorado, North Carolina, and Washington. Since millennials make up today’s largest pool of home buyers, at 38%, luxury homes in places like Palm Beach, Dallas, Denver, Raleigh, and Medina may appeal to this demographic.

The prevalence of familial wealth may also impact how likely buyers are to pay cash in a given market. According to recent data by NAR, 25% of first-time buyers reported using a gift or loan from family or friends to fund their down payment.

4. High volume of investment activity

Even with an increase in cash payments for houses, 74% of individual buyers still relied on financing and did not outright pay all cash. On the other hand, investors, which include house flippers, buy-and-hold investors, and iBuyers, almost always pay cash. It’s business rather than pleasure for these cash buyers.

House flippers

You’re more likely to receive a cash offer from a house flipper in cities with housing stock that aligns with their preferred criteria, particularly if flippers are seeing strong profits in those markets. House flippers make the highest profits in locations such as Buffalo, New York; Cleveland, Ohio; Memphis, Tennessee; Tulsa, Oklahoma, and Cincinnati; Ohio.

A house flipper or home-buying company may also offer cash for your house if you live in a city where a large percentage of houses are affordable compared to the rest of the country and need renovations. Cleveland, Ohio, is a perfect example.

“Cleveland is an investor-heavy city,” shares Daniel Sarao of Sesa Properties. “Since Northeastern and California coastal housing markets are getting more expensive, investors are coming to the Midwest where prices are lower, and they can manage to pay cash.”

Investors are attracted to these types of cities because they can buy properties for 50% to 70% of market value. They then flip the house for a profit or sometimes keep it and rent it out.

The changing market has affected flippers though. As of the second quarter of 2024, flipping transactions accounted for just 7.5% of all home sales.

Buy-and-hold investors

These types of investors buy, renovate, and keep the properties for a longer period than house flippers. They look for houses in neighborhoods that will provide long-term cash flow in the form of rental income for many years after renovation.

In today’s market, long-term real estate investors are interested in metro areas with affordable entry points that will have strong price appreciation in the next ten years, including homes in Boise, Idaho; Fort Wayne, Indiana; Denver, Colorado; and Charlotte, North Carolina.

A location with good school districts, proximity to major employers, or a nearby university are all factors that can make your house more appealing to a rental investor.

iBuyers

iBuyers have only been in existence since the mid-2010s, but they are essentially high-tech home-buying businesses that provide near-instant cash offers on homes while providing a mostly online home-selling experience. They typically prefer newer properties that are less likely to need major repairs and aren’t too expensive.

According to NAR, only 2% of homes were sold to an iBuyer in November 2024, unchanged from a year ago. Recent data shows that iBuyers only purchased 1,000 homes per month in 2023, a significant decline from the previous two years, in which they purchased between 5,000 and 9,000.

You may see a higher number of cash offers from an iBuyer in certain large metro areas with homogenous housing stock.

5. International buyer activity

As of 2024, a substantial 50% of international buyers paid cash when they purchased a U.S. home. Still, international buyers only accounted for 1.3% of all existing-home sales, and the percentage of international buyers purchasing U.S. homes has decreased in recent years.

Of the international buyers who purchased real estate in America between April 2023 and March 2024, the highest percentage went to Florida (20%), followed by Texas, California, Arizona, and Georgia.

6. Concentration of repeat buyers

If you’re in a market with a lot of first-time buyers, you’re less likely to see a cash offer. For many first-time buyers, it’s a challenge to piece together a down payment, let alone pay for a home entirely in cash, unless they have familial help or another source of funds.

However, markets with more retirees or trade-up buyers may see a higher volume of cash offers. Unlike first-timers, repeat buyers can draw on the funds of their existing homes to purchase their next residence.

How to get a cash offer for your home

As of November 2024, your odds of selling a house for cash stand at 25%, but that may go down in less competitive housing conditions. And, as we’ve detailed here, some markets are more cash-heavy than others due to the concentration of vacation homes, affordability levels compared to where buyers are migrating from, and types of buyers likely to purchase homes in a particular area.

However, if you are set on receiving a full cash offer for your home, you can request one directly. If you seek a cash offer for certainty, speed, and convenience, consider HomeLight’s Simple Sale platform.

This program provides all-cash offers for homes in almost any condition. You won’t have to worry about repairs, prep work, and open houses. You’ll receive a cash offer for your house “as is” in as little as 24 hours.

Get started today, or try your hand at getting an offer the traditional way with the assistance of a top local real estate agent.

Header Image Source: (Geoffrey Moffett / Unsplash)