Real Estate-Cash Buyers GraphicAll-cash home buyers in both the Naples area and the Fort Myers-Cape Coral market pay more on a per square foot basis for their property than buyers who use financing to complete their purchase. This statistic, compiled by real estate data provider RealtyTrac, puts cash buyers in Southwest Florida in the minority of 9% of U.S. cities where cash buyers actually pay more than buyers obtaining a mortgage.

57% of home sales in the Naples area and 49% of closed sales in the Fort Myers-Cape Coral market are purchased with cash.

All-cash buyers of single-family homes and condos nationally paid 23 percent less per square foot than all homebuyers – but cash buyers in 9 percent of local housing markets paid a premium price per square foot, according to RealtyTrac’s Q1 2016 U.S. Cash & Institutional Investor Housing Market Report.

In Florida, Naples made RealtyTrac’s top five list of local markets where cash buyers paid more for a home than buyers who took out a mortgage – an average 3.9 percent more. In addition, Cape Coral-Fort Myers ranked eighth nationally with cash buyers paying 1.5 percent more.

“While large institutional investors and other cash buyers continue to shrink as a share of U.S. home sales, these buyers still typically beat out traditional buyers using financing – in some cases even when they submit a lower offer for a home,” says Daren Blomquist, senior vice president at RealtyTrac.

Blomquist says that cash buyers often focus on properties in poor condition, which is another reason the average cash sale tends to be lower than other property sales.

“Markets where we see the opposite – with cash buyers actually paying a premium price per square foot – could be in danger of overheating,” Blomquist adds. “In most markets, cash buyers act as an anchor for home values, but in these exceptions to the rule, cash buyers are acting as an oversized sail, catching more wind and pushing home price appreciation to a potentially precarious pace.”

Southwest Florida Realtor Jim Barbour, with Pollard & Hedrich Realty in Bonita Springs works with buyers in both Lee and Collier Counties and sees a ratio today of about 50% cash and 50% financed purchases. “I believe the main reason for higher per square foot prices being paid by cash buyers is because they are often concentrated in the lower and higher end of the market. In the lower end, homes priced at $250,000 and under and condos priced at $150,000 and under, there are often many cash buyers interested in the same property, which results in multiple offers and drives prices higher. In higher end properties, buyers have many factors other than price alone that determines what they are willing to pay. Location is the most important factor in the high end market and all-cash buyers at this level are willing to pay whatever it takes to get what they want.”

Barbour adds that home buyers using financing must pass the appraisal test that every lender requires, and when combined with borrowing that is limited to a buyers income, these two factors alone prevent financed purchases from exceeding certain limits.

“The fact that the Southwest Florida housing market is one of the few in the U.S. where all-cash buyers are paying more than financed buyers explains to some extent why median prices continue to increase as sales of existing homes continues to slow in Lee and Collier Counties.”

The veteran Southwest Florida Realtor added, “Look at the list of markets where cash buyers are paying a premium. They’re among the most desirable places to live in the U.S.. That’s not bad company to be in.”

Markets where cash buyers paid a premium

  • Honolulu (6.6 percent premium)
  • Seattle (5.2 percent premium)
  • San Francisco (4.8 percent premium)
  • Naples, Florida (3.9 percent premium)
  • San Diego (2.5 percent premium)
  • San Jose, California (2.2 percent premium)
  • Los Angeles (2.2 percent premium
  • Cape Coral-Fort Myers, Florida (1.5 percent premium)
  • Oxnard-Thousand Oaks-Ventura, California (0.2 percent premium)