Why it's so hard to buy a house in Austin
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Nearly a quarter of all Austin home and condo purchases in the last 12 months or so have been all-cash transactions, per data obtained by Axios.
The big picture: It's the latest sign that the housing market is still extremely tight, as deep-pocketed buyers try to distinguish themselves from the competition.
- If you want to win a bidding war, a cash-only offer is strongly advised in many markets — because sellers don't have to worry about delays or denials involving a lender.
Reality check: For the overwhelming majority of Americans, that's impossible.
- And for now, there's little hope that high mortgage rates will bring down prices. After all, soaring borrowing costs do nothing to deter cash buyers.
By the numbers: Through the start of April, 23.57% of homes over the previous year were purchased with cash, per data provided to Axios by the Austin Board of Realtors.
- That figure had hovered around 18% the previous two years.
What they're saying: The rise of bridge loan companies, which pay cash for homes on behalf of buyers, the growth in real estate investors and a white-hot market have contributed to the spike in all-cash purchases, Ashley Jackson, president-elect of the Austin Board of Realtors, tells Axios.
- As competitive as the market might have been a few years ago, it's now "on steroids," Jackson said.
Zoom out: Nationally, the proportion of homes being sold for cash — deals where the buyer isn't taking out a mortgage — hit a new high of 28% in March. That's the topmost level we've seen in the post-2008-crisis years, when a lot of home sales were foreclosures, writes Felix Salmon in Axios Capital.
- (To buy a home out of foreclosure, you have to pay in cash.)
The bottom line: It's harder than ever to move from one home to another with the same value. Not only will the new mortgage cost you a lot more than you're currently paying, but even winning the bidding war for a new place will be challenging if you need any kind of financing.