The rise in cash purchases coincides with spiking median home prices. In Southern Nevada, cash purchases tend to account for about 20-30 percent of house purchases, and in Northern Nevada, that figure usually hovers around 15-20 percent. In the long run, Gordon said he expects the market to normalize and the higher rates of cash purchases to fall along where the market has been historically. Research from UNR's Center for Regional Studies show that in Washoe County, cash purchases of homes peaked at 28 percent of all sales in March. Across the state, cash purchases of homes in Nevada’s major metropolitan areas have hit new highs in recent months. On a home tour last week, Reynolds ultimately decided not to put in an offer because the sellers wanted to waive contingencies, meaning that if the appraised value is less than the sale amount (and the bank cannot guarantee a return on its loan), then Reynolds would have had to make up the difference in cash or lose a $3,000 deposit if he backed out - more money than he could gamble. Cash buyers, on the other hand, can waive inspections and sellers have fewer hoops to jump through. Though Reynolds has a guaranteed loan, he is still at a severe disadvantage because the VA has stringent appraisal and inspection requirements. “But with the cash buying right now, I’m kinda out of the loop.” “I’m looking for a single-family home just to start my American dream and just to go forward, man, to push forward,” said Reynolds, who was approved for a Veterans Affairs (VA) housing loan. He’s looked at four or five houses, but all were snatched up by cash buyers before he could put in an offer. If home buying is a war, Leroy Reynolds is losing the battle.įor the last six months, Reynolds - a maintenance technician and military veteran - has worked with Caldwell to search for a house for his wife and three children. Leona Caldwell, right, talks with her client Leroy Reynolds during a tour of a property in North Las Vegas on Friday, July 30, 2021. "We'd expect that the share of cash buyers have the potential to continue to increase particularly as availability remains tight in the local market." And so the competitive environment for homes has increased," Gordon said. "There's limited inventory in the market. The rise stems partly from supply and demand pressures, said Brian Gordon, a principal with the economic and real estate analytics firm Applied Analysis. In the north and south, cash purchases are up steeply year-over-year after declining for years since the Great Recession. "So the cash buys, the investors, they do tend to put superficial pressures on appreciation rates in the overall housing market." That's very bad for entry-level homebuyers or just normal worker bees trying to get into a better house," he said. Between the first quarter of 2015 and the second quarter of 2021, the median home price in Washoe County rose 92.5 percent. That directly leads to higher appreciation rates, according to Brian Bonnenfant, project manager for UNR's Center for Regional Studies. In Southern Nevada, 31 percent of purchases in June were made with cash - a 6.1 percent increase in cash purchases since February 2021 and a 3.7 percent increase since June 2016.Īs the housing market across the state tightens and home prices are rising, individuals with deeper pockets are offering to not only pay for homes with cash, but often place offers above a home’s listing price. “Be ready for a hell ride,” she tells clients, explaining that without the need for a loan or mortgage, cash buyers can more quickly complete home sales with fewer steps than other homebuyers, giving them a leg up in the process.Īcross the state, an increasing number of cash purchasers - including investors, investment pools, larger corporations and wealthy buyers from out of state - are driving up the pressure and squeezing out would-be purchasers reliant on loans and mortgages.īetween the first quarter of 20, cash buys increased by 41.6 percent in Washoe County, and rose 19.9 percent from 2015. It’s a message that Leona Caldwell, a Las Vegas realtor who works primarily with low-income and working class home buyers, emphasizes whenever she sits down with someone searching for a house. In Nevada’s housing market, cash is king.
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