Understanding the Rise in Cash Buyers in the Quad Cities

The real estate market in the Quad Cities has transformed over the years, driven by factors like demographic changes and development efforts, and recently marked by the increased presence of cash buyers. In 2023, Prescott ended the year with a total of 51.5% cash sales. The city was deemed to have the 10th highest concentration of cash buyers per ATTOM Data Solution’s 2023 Year-End Home Sales report. As 2024 began, the trend persisted. This past January, 385 homes were sold in the Quad Cities, 151 of which were cash sales. Compared to the national rate, the percentage of cash sales during the month of January was higher, settling at 37.5%. The following month, 40.6% of sales in the area were cash, in addition to a greater number of total homes sold. Most recently, cash transactions accounted for 33% of the 230 homes sold in March. 

Given the recent information, it’s reasonable to expect the trend of cash purchases to persist in the future.

So, who are the buyers paying with cash? Based on six months of recent data from NAR, most cash purchasers across the country are either vacation buyers or investors. Despite this, primary residence buyers are actively making all-cash purchases when buying a home. The difference between the individuals buying a primary residence with cash and the vacation buyers and investors is the means by which they can make the purchase: equity. Many of these primary residence consumers owned a home, sold it, and then used the earnings to purchase their next property without applying for financing. The ability to make the purchase was likely resulting from the housing equity they had been able to accumulate due to recent rising home prices.

In addition to greater buyer equity driving cash sales, the competitive nature of the current market has made cash offers increasingly more attractive to sellers. Cash offers often entail fewer contingencies and lead to faster closings, meaning sellers may be more apt to accept them. The increase in investment activity in growing areas such as the Quad Cities also leads to more cash sales, as investors tend to leverage cash to acquire properties more efficiently. As home prices are expected to rise throughout 2024 because of limited inventory and high demand, all-cash buyers are likely to remain common.

The recent rise in cash buyers is a notable trend that will continue to shape the Quad Cities real estate market. Economic factors such as interest rates and inventory conditions will continue to influence the prevalence of cash sales and impact market dynamics. Understanding these trends is crucial for both buyers and sellers in navigating the market effectively. Consult with a knowledgeable realtor to guide you through your next real estate journey. QCBN

By Jeanelle Shearer

Jeanelle Shearer is a local REALTOR® and Associate Broker for Realty One Group Mountain Desert. She is the 2024 President of the Prescott Area Association of REALTORS® (PAAR). For additional information or to contact PAAR, go to www.paar.org.

Jeanelle Shearer is the 2024 PAAR president.

About PAAR: The Prescott Area Association of REALTORS® (PAAR) is the trade association representing more than 2,000 REALTORS® serving the greater Quad Cities area. Established in 1944, PAAR’s mission is to advocate for private property rights, and provide its members with resources to foster their business success. The term REALTOR® is a registered trademark, which identifies real estate professionals who subscribe to a strict code of ethics as members of the National Association of REALTORS®.