Boston condos being bought with cash
Oct 2011 05

Jenifer McKim and Rona Fischman at the Boston Globe report on a recent phenomenon.

Generally, about ten percent of real estate transactions are paid with cash. This year, the average in Massachusetts for the first three quarters is forty percent. It is this change that piqued the interest of both the Boston Globe and WBUR.

And, further, WBUR’s Curt Nickisch says:

In some Massachusetts communities, more than half of home sales this year are have been paid with cold hard cash. Those communities include Provincetown, New Bedford and Cambridge.

Many people looking to purchase homes right now are doing so for specific reasons: they have an immediate need to own real estate – either because of a life change or because they need an investment. In Boston, many low-priced condos are purchased by parents for their children to live in while at college. This continues in good economic times as well as bad. As an investment, many people see less risk in real estate than in the stock and bond markets, if their plans are long-term.

Finally, many people buying these days are looking for second (and third) homes. Again, this happens in any economic climate. Percentage-wise, if not in raw numbers, it’s probably gone up, as the overall market sales volume has gone down by as much as 30% in some neighborhoods of Boston and in some cities and towns across the Commonwealth.

While tight credit guidelines might seem to be the reason, my guess is that this isn’t the overwhelming cause of cash buyers.

If you asked someone why he/she bought with cash, he/she would probably reply, “Because I could.”

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