A national report today that 40 percent of home buyers paid cash for their piece of the American dream "doesn't sound right," to a Greater Des Moines real estate professional.
It's another example that national trends frequently spin off the surface of a steady and somewhat predictable Greater Des Moines economy.
Real estate analytics firm RealtyTrac LLC reported the national figure, and MarketWatch interviewed industry observers who said cash deals sound great, but might not bode well for the housing recovery.
The July figure was up from 35 percent in June and was the second highest rate of all-cash deals since RealtyTrac started its survey in January 2011, MarketWatch said.
A report last week by Goldman Sachs Group Inc. weighed in even stronger in the all-cash camp, estimating that cash sales now account for 57 percent of all residential home sales versus 19 percent in 2005. The National Association of Realtors estimates that cash deals made up 31 percent of sales in July, still at an all-time high.
According to the Greater Des Moines Association of Realtors report for July, buyers paid cash in 15 percent of home purchases. Association President Larry Pickering is comfortable with that number and considers it an accurate reflection of a healthy market.
Cash buyers in the local market tend to be people who are "more mature, who have done well" and have sold one or two homes during their lifetimes and preserved the cash for a purchase later in life.
"My most recent sale was to an out of state couple who sold their home and moved here to be close to family," he said. Pickering sells real estate for Iowa Realty Co. Inc.
"It's always nice when you see that cash buyer," he said.
On the other hand, 64 percent of buyers last month used conventional financing.
The cash-only sales are more prominent in large cities, according to RealtyTrac. The cities with the largest month-over-month increases were Dallas, up 82 percent, St. Louis, up 66 percent, Los Angeles, up 32 percent, and Seattle and Phoenix, both up 21 percent.
MarketWatch reported that some experts believe the cash deal is an unsustainable trend.
Cash buyers tend to fall in three groups: the wealthy, retirees and investors who buy low and sell high. None of those groups are large enough to sustain the market, Daren Blomquist, vice president of RealtyTrac, told MarketWatch.
However, the low number of cash buyers in the Greater Des Moines market probably isn't a cause for alarm, Pickering said.
He also cautions buyers that offering cash probably isn't a good way to get a lower price on house.
"It's going to be the same amount in the seller's pocket," he said.