What Percentage of Homebuyers Pay Cash? It Depends on the Market
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Dana Todd, Contributing AuthorClose
Dana Todd Contributing AuthorDana W. Todd writes nationwide for the interior design, luxury homebuilding, real estate, and architecture industries.
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Alexandra Lee, Junior Associate EditorClose
Alexandra Lee Junior Associate EditorAlexandra is a junior associate editor of HomeLight.com. Previously, she served as a writer and social media manager at Santa Barbara Life & Style Magazine, in addition to interning at the nonprofit honors society Phi Beta Kappa. Alexandra holds a bachelor's degree in communication and global studies from UC Santa Barbara, and she has three years of experience reporting on topics including international travel, luxury properties, celebrity interviews, fine dining, and more.
Among your family and friends, you may not know anyone who paid all-cash for a house. So, what percentage of home buyers pay cash, and how likely are you to receive a cash offer if you sell your home?
It varies by individual market, but cash sales make up a considerable portion of home purchases as the nation shifts toward a buyer’s market and mortgage rates remain close to 7%, according to the National Association of Realtors (NAR).
In June 2024, cash sales represented 28% of all existing home sales. This was down slightly from 32% in January, which marked the highest share of cash sales in a decade, since 2014.
Despite the rapid rise in home values to a median price of $426,900, buyers have been more eager to pay cash or find a cash solution in order to avoid higher interest rates on a mortgage. This has also kept many first-time homebuyers out of the market. According to NAR’s 2023 Profile of Home Buyers and Sellers, only 32% of buyers were first-timers, an increase from 26% in 2022. Many sellers also prefer to accept all-cash offers to avoid the possibility of financing delays and reduce the chances of an offer falling through — hence the notion that “cash is king.”
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Historical effect of economics on the cash real estate market
The number of homes sold for cash tends to rise and fall in line with other economic patterns. Data from the U.S. Census Bureau on the number of new single family homes that sold for cash from 1988 to 2023 shows that cash sales are more likely to occur during a property boom, and then retreat during a downturn.
For example, during the property boom of the late 1980s, as many as 62,000 new single family homes sold for cash during the year of ‘88. That number dropped to 37,000 in the brief early 1990s recession. A similar trend emerged in the 2000s — cash sales jumped to 52,000 in 2005 before falling to 17,000 in 2009 in the aftermath of the Great Recession.
During the pandemic housing market boom, all-cash purchases jumped 10% in 2021 from the year prior and were found as the most effective tactic at winning in bidding wars. Though market conditions are vastly different in 2024, cash sales remain prevalent due to elevated housing prices and high mortgage rates.
In essence, a strong jobs market gives more buyers the ability to pay for a house with cash, and when housing demand surges, cash purchases may rise in response to a more competitive market. When markets cool, housing often becomes less competitive and people may prefer to save their money in the face of financial instability.
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 iBuyers (instant buyers) 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 reached a whopping 60% in the first quarter of 2024.
Due to its fantastic weather, five of the top 10 metro areas with the largest share of cash home sales are in Florida, according to Axios. 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. While cash sales have skyrocketed in the Sunshine State, they’ve been lower than average in markets like Santa Clara County, California, which is home to the city of Los Altos, where only 26% of homes were sold for cash in May 2024.
2. 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.
A recent report by Yahoo! Finance notes that the top five states that “rich millennials” are moving to are California, New York, Texas, Colorado, and Florida. Since millennials make up today’s largest pool of home buyers, at 38%, luxury homes in places like Silicon Valley, New York City, Miami, and Austin may appeal to this demographic.
The prevalence of familial and stock market wealth may also impact how likely buyers are to pay cash in a given market. According to recent data by NAR, 23% of first-time buyers reported that they used a gift or loan from family or friends to fund their down payment. Another 11% relied on the sale of bonds or stock to pay for a house.
3. High volume of investment activity
Even with an increase in cash being paid for houses, 80% of individual buyers still required financing in 2023 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 are more likely to receive a cash offer from a house flipper in certain cities with housing stock that matches preferred house flipper parameters. To get an idea of where these locations are, a recent post by Deal Machine breaks down the best cities for home flippers to buy and sell properties based on five key metrics.
If you live in one of these areas, such as Fresno, California; Buffalo, New York; or Boston, Massachusetts; you may have an easier time getting a cash offer for your property.
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 that afford them the opportunity to buy for 50% to 70% of market value. They then flip the house for a profit after they complete renovations, or sometimes keep it and rent it out.
The changing market has affected flippers, however, and as of the first quarter of 2024, flipping transactions accounted for just 8.7% of all home sales, according to real estate data firm ATTOM.
Buy-and-hold investors
These types of investors buy, renovate, and keep the properties for a longer time 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 post-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 10 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 to buy newer properties that are less likely to need major repairs and aren’t too expensive.
According to NAR, only 1% of homes were sold to an iBuyer in June 2024, unchanged from a year ago. iBuyers only purchased 1,000 homes per month in 2023, a significant decline from the previous two years, in which they were purchasing between 5,000 and 9,000. You may see a higher amount of cash offers from an iBuyer in certain large metro areas with homogenous housing stock.
4. International buyer activity
As of 2024, a substantial 50% of international buyers pay cash when they purchase a U.S. home, according to a report from NAR. Still, international buyers only account for only 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 that did purchase real estate in America between April 2023 and March 2024, the highest percentage went to Florida (20%), followed by Texas, California, Arizona, and Georgia.
5. Concentration of repeat buyers
If you’re in a market with a lot of first-time buyers, it may be less likely that you’ll 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 put toward the purchase of their next residence.
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How to get a cash offer for your home
As of June 2024, your odds of selling a house for cash stand at 28%, 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.
With Simple Sale, HomeLight provides all-cash offers for homes in almost any condition. You won’t have to worry about repairs, prep work, and open houses and will 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: (RDNE Stock project/ Pexels)
- "All-Cash Buyers More Likely to Win Bidding Wars", National Association of REALTORS® (March 2022)
- "Number of houses sold for cash in the United States from 1988 to 2023", Statista (March 2024)
- "Highlights From the Profile of Home Buyers and Sellers", National Association of REALTORS® (November 2023)
- "Share of Cash Buyers Surges to Decade High", National Association of REALTORS® (March 2024)
- "NAR: Market Is Shifting Slowly in Buyers’ Favor", National Association of REALTORS® (July 2024)
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