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Sarasota-Bradenton 2nd in Nation for Cash Sales

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florida-cash-buyersHome buyers in Southwest Florida are still paying with cash at one of the fastest rates in the nation.

Several recent studies show the Sarasota-Bradenton metro area maintains a higher percentage of cash buyers than almost anywhere else in the U.S.

It's a similar situation throughout Florida.

Of the 10 metro areas with the highest share of cash purchases in the first quarter, more than half were in Florida, according to real estate analyst Zillow.

"In Florida, cash is king," Zillow said. "At the end of the first quarter, seven of the top 10 metros with the highest share of home purchases made in cash were in Florida, up from six at the end of 2014."

Sarasota-Bradenton ranked second among metro areas in the nation for cash sales, with 58 percent of all home buys closed without financing. That was behind only Miami-Fort Lauderdale's 59 percent.

All 10 of the U.S. metro areas with the highest share of cash buyers were east of the Mississippi River, while cash buyers were less common in the western U.S.

"Homes in many eastern markets are generally less expensive than in their western counterparts, which can be conducive to more cash purchases," Zillow said. "Cash purchases are also more likely to be made by investors and institutional buyers looking to buy many less-expensive homes all at once to convert into rental housing and/or flip as the market improves."

In addition, the analyst noted, Florida's judicial foreclosure process can be slow, extending the period when investors are buying discounted homes from lenders as they clear foreclosure.

Another researcher, CoreLogic, found that cash sales accounted for 54.5 percent of all home sales in June in Sarasota-Bradenton. The two-county region ranked third among the nation's large metro areas.

But the share of cash sales was down from 60.4 percent over the year, perhaps reflecting the declining influence of the large institutional buyers that swept into the region several years ago.

Florida posted the second-highest share of cash sales in June, at 45.8 percent, behind only New York's 47 percent, CoreLogic said.

The U.S. rate was 31.3 percent, down from 34 percent over the year.

"The cash sales share peaked in January 2011, when cash transactions made up 46.5 percent of total home sales nationally," CoreLogic said. "Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in June 2015, the share should hit 25 percent by mid-2017."

Jim Quinn, president of the Port Charlotte-North Port-Punta Gorda Association of Realtors, said cash sales have "consistently" accounted for less than 50 percent of activity this year, with distressed properties representing a smaller segment of sales.

"I would say both of these trends are indicative that more of the buyers are purchasing for personal use as opposed to investment," he said.

In a separate study, researcher RealtyTrac said buyers paid cash for 48.6 percent of single-family homes and condominiums sold in the Sarasota-Manatee region in August.

That ranked the two-county region 10th nationwide among major metro areas.

Cash sales in Sarasota-Manatee were actually down slightly from the 51.2 percent posted last year, also showing the shrinking impact of investors.

No-financing sales accounted for 43 percent of home deals throughout Florida in August, while the U.S. average was 24.5 percent.

RealtyTrac's latest report also confirmed what local Realtors have been saying for months: Home sales in Sarasota-Manatee are on a pace that could set records this year.

It says 13,600 homes and condos had been sold through August in the two counties. At that rate, it could top the record of 23,664 set in 2005.

Herald Tribune 10/5/2015