Real estate investments in the United States has changed drastically! This is because 60% of Americans are running short of cash. They don’t have access to floating funds. This makes the process of buying and selling homes a challenge. Without “floating funds”, the process of buying properties becomes a major challenge. The sales of homes will remain within normal boundaries. The Wall Street Journal declares that all-cash investments have dropped significantly in the past few years.

A survey done by the Attom Data Solutions revealed that 29% of homes that were purchased in the year 2017 were through all-cash. And, more than 70% of the homes were purchased through hefty loans. The all-cash purchases were for the most expensive or the least-expensive properties. People in between were not able to make all-cash investments.

Your Inexpensive & Expensive Homes

The New York Times revealed that low-cost homes are those below 100,000 USD. And, these homes were purchased without any debt 70-percent of the time. On the other hand, homes above 2 million USD were made with all-cash 49-percent of the time. The most expensive homes are bought by international buyers and people with “rich, flamboyant” lifestyles.

The above figures clearly show that millions of Americans are not able to buy expensive homes or compromise on the inexpensive ones. They are stuck somewhere in the middle. They incur debts to buy properties. Above all, millions of Americans don’t have savings. This decreases their chances of all-cash investments.

The Benefits of All-Cash Purchases 

With respect to sellers, they have many interesting benefits. One, sellers have zero risks during all-cash offers. Two, they don’t need to spend long hours waiting in queues. Three, they don’t need to run behind lenders. Some buyers prefer all-cash deals because they can bag interesting properties at rock-bottom rates. Homeowners reap many benefits from all-cash sales. In the long run, they don’t have to spend money or time on mortgage interests. Though mortgage interests are historically low, buyers can save between 4 and 5 percent from all-cash investments.

Let’s do the math! For a loan worth 250,000 USD, with a duration of 30-years and an interest rate of 4%, the buyer would save up to 180,000 USD. 

In the next few years, mortgages will become a serious burden. If the existing tax plan is not modified, it will have severe effects on sellers and buyers. The tax plan would cap all mortgage deductions and reduce (or eliminate) reductions on 2nd-time buyers. Before you plan to invest in a property, you must ensure if you have enough funds. You must be able to cover all expenses. Remember, you need money for the paperwork and renovations too. This will be around 2 to 5 percent of the property’s cost.

Places for You!

Meanwhile, many home buyers in the United States are migrating to affordable regions. They are scanning through cities with low living costs. They focus on properties with a median cost of 250,000 USD or lessor. Fortunately, there are many cities to support them.

  • Fayetteville in Arkansas scores 7.4 for the quality of life and value. It is a beautiful destination for real estate investments. It is a center for commerce, culture, entrepreneurism and higher education.
  • “The Triangle” in the United States is made of Chapel Hill and Raleigh-Durham. It is home to many tech giants like Cisco and IBM. It is a perfect place for young investors.
  • Des Moines has attracted hundreds of young investors in the past few years. It is filled with boutiques and family-run restaurants. The job market in this part of America is thriving.