Tuesday, January 23, 2018
Business

Cash still a big driver for Tampa Bay home sales

To the difficulty of finding a house these days, add this factor: cash still talks.

Though not as common as during the foreclosure crisis, cash sales continue to make up a significant part of Tampa Bay's tight real estate market. That means buyers who have to borrow can be at a distinct disadvantage, especially those hunting for houses under $300,000.

"I have a customer in that price range and she says, 'I need to think about it,' and the next day it's been sold," said Ann Rogers, a Pinellas County Realtor. "It just creates a sense of urgency for buyers in that price point."

RELATED COVERAGE: Tampa Bay cools down to more moderate home price increases

Ironically, Rogers' client is looking for another place because her own house, in need of major repairs, sold quickly to an investor — for cash.

In the second quarter of this year, Tampa Bay ranked fifth in cash sales among major metro areas as 43 percent of bay area houses, condos and townhomes changed hands for cash, according to the real estate tracker ATTOM Data Solutions. Nationally, the quarter marked the first increase since 2013 in the share of cash sales.

For single family homes — which make up the biggest chunk of the bay area market — cash sales accounted for 24 percent of all sales in August, or one in every five. Cash deals were especially prevalent for houses under $300,000, the price point at which first-time buyers are more likely to compete with investors.

It was an investor who for $240,000 last month snapped up a remodeled three-bedroom, two-bath house in South Tampa's Gandy Manor area.

"We had great offers with financing but $10,000 cash below the asking price was a no-brainer," said Roderick Smith, the listing agent. "No stress; no appraisal; just a simple five-day inspection period and a 10-day close."

That was a somewhat unusual transaction: Investors paying cash frequently offer much less than the asking price. That can play to the advantage of buyers who need to finance but are willing to come closer to what the seller wants.

"Most sellers will wait (on financing) if they can make that extra $25,000," Smith said.

But cash offers can be hard to resist, and they make it tougher for first-time buyers to enter the housing market if they need to get a mortgage. Agent Luke's Cardillo's client had an ideal starter home — a 1,000-square-foot house in Tampa's Ballast Point area — that generated substantial interest.

RELATED COVERAGE: Millennials in Tampa Bay are starting to buy houses and that's going to revolutionize real estate

"That house had first-time homebuyer written all over it,'' Cardillo said, "and I had prepared the seller for getting an offer with a VA or FHA loan."

Instead, the seller accepted a $224,000 cash offer, which spared him from having to make repairs that a lender or insurance company might have required if mortgage had been involved.

"Cash is much easier for sellers,'' Cardillo said.

For sales of single-family homes in August, Hillsborough had the lowest share of cash deals at 19.5 percent. The figures were considerably higher in the other three bay area counties — 25.6 percent in Pasco, nearly 28 percent in Pinellas and 30 percent in Hernando.

Demand for houses is especially fierce near downtown St. Petersburg, where buyers with cash routinely pre-empt those like Rogers' client who hesitate a bit too long.

"She started looking in Euclid-St. Paul (near downtown) and then started going west and then north and then further west," Rogers said. "We just keep moving the goal post."

Even areas that can bill themselves as being with a 10- or 15-minute drive of downtown St. Petersburg have suddenly become sought-after, as shown by the house in Central Oak Park. It sold in August for $199,999 cash — the full asking price — after just one day on the market.

"That (offer) came in right away because they were trying to beat other people," said Jenny Roche, the listing agent. "The buyers had sold another place in the Orlando area for about twice the price and were using the cash from that sale to buy this home."

During the recession and foreclosure crisis, cash buyers helped keep Tampa Bay's housing afloat. Big institutional investors like Blackstone snapped up thousands of bay area homes to rent out.

In recent years, those institutional investors have largely withdrawn from the market, and cash transactions today often involve local companies or individual buyers who made a bundle selling a more expensive home.

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate.

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