Cash Home Buyers Are Not Behaving Rationally

Blomquist: “Cash buyers were not paying a premium even during the last housing bubble of 10 years ago in most of these markets (with a couple of exceptions).”

IRVINE, CA—Cash home buyers should always have an advantage over financed buyers and see at least some discount below financed buyers, RealtyTrac’s VP Daren Blomquist tells GlobeSt.com. Yet, according to a recent report from the firm, counter to the national trend, in 9% of markets cash buyers actually paid a premium, up from 5% of markets a year ago. These markets include Seattle; San Francisco; Naples, FL; San Diego; San Jose; Los Angeles; and Manhattan. In most of these high-flying markets, cash buyers historically have usually bought at a discount, so this recent trend is abnormal, according to RealtyTrac.

In addition, institutional investors are pulling back on purchases nationwide, but ramping up in some select markets. New institutional-investor hot spots include Birmingham, AL; Knoxville, TN; Fort Walton Beach, FL; Pittsburgh; and Albuquerque. We spoke exclusively with Blomquist about these trends and what he feels is causing them.