Wow, the real estate market in Salt Lake County is hot right now. It may not be as crazy as the Bay Area, but it sure does feel like it. As of today, March 11th 2020, there are only 1,215 active residential properties listed in the county. That’s 44% lower than last year, and is just over 1/3 of the available market in 2015.
So why am I thinking about this right now? I hosted an Open House this weekend, and I knew it was a great house and lots of people were going to be interested in it. It was also priced perfectly by the seller and their agent to attract a buyer quickly. At the open house I met all of the people who presented offers and heard a little bit about their planned offer. Did I see their offers, no. So I am not 100% on all of the offer details, but I am sure everyone went in over asking, and I know the winning offer was cash.
I heard it all the time in CA “My offer was beat by someone bringing all cash to the table”. Now, I have now heard it from several people in SLC. Are you in the market and experiencing this? Well if you are here, I have some news for you. “You are not alone, but it is nothing new.” As an analyst by trade, I love digging into data to understand what really is happening.
Would it bug you to know that purchases of single family homes using cash has not changed much. I was surprised when I saw this, and I hope this makes you feel at least a little better. With 9 of 10 still being financed in today’s market it really shows the importance of getting pre-approved, not just pre-qualified.
The next thing people financing should know, is that you are possibly ending up with a better deal than those paying cash.
Based on our data here in SLC for single family homes, the median sales price for a cash offer home in 2019 was 7.5% higher than for those financing. This makes sense at the end of the day, because cash offers do not have the same appraisal requirements as loans. You should say to yourself, but wait doesn’t paying cash get you a discount on everything else in life. Yes! So, yikes!
For those paying cash, remember it is already attractive that you are paying cash. Do not end up paying more than you need, and if you want to pay cash, Dec/Jan seem to give you the best bang for your buck. One thing to consider though, it is not likely going to shorten your time to close, because the person you are buying from is likely paying for their next place with a loan. Lastly, if you are thinking about paying cash check out this Forbes article.
Let me know what your thinking. Would love to hear your thoughts. Email me @ firstname.lastname@example.org.
Data is from UtahRealEstate.com.