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All-cash purchases squeeze buyers requiring mortgages

Copyright © 2013 Albuquerque Journal

In N.M., 29% of July deals used currency

All-cash homebuyers are playing a major role in the housing recovery, sometimes squeezing out potential buyers who need to get a mortgage, according to a new report by Irvine, Calif.-based RealtyTrac.

In New Mexico, 29 percent of the home purchases in July were all-cash deals, reflecting a phenomenon that’s being seen in most states around the country.

Despite seeming like a high proportion of sales, New Mexico’s 29 percent rate was 18th lowest among the 47 states for which all-cash sales data was available.

Nationwide, an average of 40 percent of home sales in July were all-cash deals, up from 35 percent in the preceding June and 31 percent in July 2012, RealtyTrac reported.

The national average is driven up by the high proportion of all-cash sales in states where housing markets are recovering fast after being hard hit by the bursting of the housing bubble. Six states saw half or more of all home sales paid in cash during July, led by Florida at 66 percent and Nevada at 64 percent.

“Low inventory of homes available for sale is proving to be a double-edged sword in many local housing markets that have bounced back quickly from the real-estate slump,” said Daren Blomquist, vice president at RealtyTrac.

Noting that home prices are rising in many markets due to low inventory and strong demand, he said, “Sales volume in these markets is down even as the percentage of cash sales rises, indicating there is still strong demand but that buyers who need financing to purchase are increasingly left out in the cold.”

In other measures of home sales in July, New Mexico is tracking dead even with national averages for home purchases by institutional investors at 9 percent and bank-owned home sales at 9 percent.

The institutional investor category, which excludes lenders, includes buyers who have purchased at least 10 homes in the preceding 12 months.

The high proportion of all-cash purchases would appear to indicate there’s additional investor activity on a smaller scale in the home market.

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