Portland Oregon Real Estate Market April 30, 2015

Cash is King

We've heard the adage "Cash Is King" when talking about real estate.  However,  it has historically been associated with getting a "deal" or significantly lower purchase price.  In our local Portland real esate market, that "deals ship" sailed about two years ago.  That said, now many buyers looking to purchase in close-in Portland and attractive surrounding neighborhoods and cities are facing multiple offer situations, with many of those offers being all cash.

Most first-time and move-up buyers need to acquire a mortgage to help finance the purchase of their new home.  It's the norm to have a conventional loan of 5%-20% down.  Two years ago, this truly wasn't an issue for buyer's looking to purchase, as seller's would accept these offers without thinking twice.  Now, these buyers face multiple offers, sometimes 10%-20% over list, with all cash often winning out.

Why is cash better for sellers?  It's one less hoop that can cause a problem for the transaction.  With a financed purchase, the loan has to go through underwriting that can sometimes throw up a flag.  Even more of an issue, however, is no appraisal is required with a cash purchase.  With homes going so much over list price, an appraisal could definitely cause a problem.  

Here's a fabulous in depth article that explains what is driving our Portland market, and how this cash is making its way to our area,  Cash is King .  Believe me, we who work in this market are hoping to return to some normalcy, but it doesn't appear it will be anytime soon.