Home prices have risen significantly over the last year, and buying a home has become a much pricier prospect. The typical listing price gone up, and homes are frequently going for above the listing price. Would be buyers should also make sure they have a good chunk of that cost saved up, as down-payments are also rising.
According to the Wall Street Journal, being able to front a large down payment has become a much bigger factor in closing on a home. Data from the National Association of Realtors shows that in April of this year, over half of homebuyers made a down payment of 20% or more.
This is only the third time this number has been so high in the decade which the NAR has recorded data. Both other times have been in the last twelve months, specifically in September and December of 2020.
The NAR also reported that unusually high numbers of homebuyers are purchasing homes in cash. Around 25% of existing-home sales in April were paid in cash. This is the highest recorded number since 2017.
A lack of housing supply has made the market hyper-competitive. In a seller’s market, home sellers are often able to select between multiple offers. Cash offers are particularly attractive, as they do not rely on buyers securing a mortgage. The same logic applies to larger down payments, which are generally viewed by agents and sellers as more secure.