Cash Home Purchases Drop to Three-Year Low as Market Dynamics Shift in 2024

The landscape of residential real estate transactions underwent a significant transformation in 2024, with all-cash home purchases declining to their lowest level in three years. This comprehensive analysis explores the changing dynamics of cash purchases across major U.S. metropolitan areas, revealing important trends and regional variations that shaped the market.

National Trends: Understanding the Decline

The proportion of cash purchases in U.S. home transactions decreased to 32.6% in 2024, marking a notable decline from 35.1% in 2023. While this represents the lowest percentage since 2021, it's worth noting that cash purchases still maintain a stronger presence compared to pre-pandemic levels, when they typically ranged between 25% and 30% of total transactions.

This shift can be attributed to several factors, most notably the reduced presence of institutional investors in the market. However, as Redfin Senior Economist Sheharyar Bokhari points out, the relatively high rate of cash purchases persists due to the current expensive housing market, which tends to favor wealthy buyers who can afford to pay cash.

Florida's Dominance in Cash Transactions

Despite the national decline, Florida continues to lead the nation in cash purchases, with several of its metropolitan areas ranking at the top of the list:

• West Palm Beach: 49.6% (-1.2 percentage points year-over-year)

• Jacksonville: 40.6% (-6.4 percentage points year-over-year)

• Fort Lauderdale: 38.9% (-2.5 percentage points year-over-year)

• Miami: 38.1% (-3.8 percentage points year-over-year)

This concentration of cash purchases in Florida markets suggests a continued strong presence of wealthy buyers and investors, despite the overall national cooling trend.

Coastal Markets Show Different Patterns

In stark contrast to Florida's markets, expensive coastal metropolitan areas demonstrated significantly lower percentages of cash purchases:

• San Jose, California: 18.1%

• Oakland, California: 18.6%

• Seattle, Washington: 20.6%

• Virginia Beach, Virginia: 21.9%

• Los Angeles, California: 22.2%

This disparity highlights the varying regional dynamics and buyer behaviors across different housing markets, with coastal tech hubs showing a stronger preference for traditional mortgage financing.

Notable Market Movements

Several markets experienced significant changes in their cash purchase rates:

Biggest Increases:

• Pittsburgh: +2.1 percentage points

• Oakland: +1.0 percentage point

• New York: +1.0 percentage point

Steepest Declines:

• Cleveland: -8.3 percentage points

• Baltimore: -6.8 percentage points

• Jacksonville: -6.4 percentage points

Market Insights

Why are cash purchases declining nationwide?

The decline can be attributed to reduced investor activity and changing market conditions. However, the rate remains historically high due to wealthy buyers' continued presence in an expensive housing market.

Will the trend continue in 2025?

According to market experts, the share of cash purchases is unlikely to decrease significantly unless mortgage rates experience a substantial drop that could drive increased financing activity.

Why does Florida dominate cash purchases?

Florida's high cash purchase rates reflect a combination of factors, including strong interest from retirees, foreign buyers, and investors attracted to the state's favorable tax policies and steady property appreciation.

How do coastal markets differ?

Coastal markets, particularly in California, show lower cash purchase rates due to extremely high property values and a greater reliance on mortgage financing, even among wealthy buyers.

What does this mean for the average homebuyer?

While cash purchases are declining, they still represent a significant portion of the market, potentially creating competitive challenges for buyers relying on traditional financing in certain regions.

These trends suggest a market in transition, with regional variations playing an increasingly important role in determining local market dynamics. As we move further into 2025, monitoring these patterns will be crucial for understanding the evolving real estate landscape and its implications for both buyers and sellers.