Back in August, when we wrote that “A Stunning 60% Of All Home Purchases Are “Cash Only” – A 200% Jump In Five Years” based on Goldman data, many laughed, unable to fathom that the majority of the US housing market has become a flippers’ game played by institutions and the uber wealthy, who don’t need a stinking mortgage to buy that South Beach mansion. The implication of course being that housing is not effectively shut for that part of the population – the vast majority – that relies on credit to be able to purchase a home (a finding confirmed by the ongoing collapse in mortgage applications).
As it turns out we were just a little ahead of the curve as usual, and as real estate company RealtyTrac reported overnight, with data that naturally is delayed due to the delayed impact of houses coming out of the much delayed foreclosure pipeline, “All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012.” That’s a 10% increase in one month for a 6-9 month delayed series, which means that in reality, roughly about 60% of all homes are now purchased with cold, hard cash.
The chart below shows how in June and July the data finally started reflecting the Fed’s September 2012 QEternity reality. As we said: 6-9 month lag.
Incidentally, broken down by states, this is already confirmed in places like Florida, Wisonsin and Alabama. From RealtyTrac:
States where all-cash sales accounted for more than 50 percent of all residential sales in December included:
- Florida (62.5 percent),
- Wisconsin (59.8 percent),
- Alabama (55.7 percent),
- South Carolina (51.3 percent),
- Georgia (51.3 percent).
And rising fast.
At this pace the entire US housing market will be at the mercy of flippers who have access to unlimited funding and are only buying a home, with zero regard for cost, in hopes of selling it to an even greater fool. Obviously, that has endless cheap credit happy ending written all over it.
As for everyone else: please pay your landlord, Blackstone, at the end of the month.