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what_comes_after_q t1_j7o3q39 wrote

Reply to comment by Cheap_Coffee in These housing numbers are insane. In some towns the cost to buy a house is 10x the average salary. by LopsidedWafer3269

Well, paying cash is a little bit complicated. First, a lot of people pay cash because they are using the sale of another house. Person A buys a house for 500k, then the market took off, he sells it for 800k to buy another house for 800k. That is a cash purchase. Second, banks are doing cash equivalent loans. This means the buyer is pre approved for the loan, no risk of the loan falling through. This is debt, but cash to the buyer. And then finally yeah, you have people who have cash on hand to buy housing.

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paddenice t1_j7osvg9 wrote

Sounds like a contingency purchase, which I’m not sure is the same consideration as a cash offer. Closing on cash is done within 30 days. If you need to muck around with the sale of your home, to buy another “in cash”, you’re not closing in 30 days due to the buyer of your home, in all likelihood.

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Shnikes t1_j7pfed8 wrote

Banks do cash equivalent loans even when rates are higher? Also how often is this scenario happening? Because the new home they are buying for $800k was also likely $500k before the market took off. It’s unlikely they are getting a better house unless they are moving to a new city where the housing market didn’t take off.

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