Welcome back based on a brand new report From redf finin one and every three home Buyers right now are paying all cash to Buy houses right now the high share in Nearly one decade here it says just over 1/3 or 34.1% of us home purchases in September Based on the most recent data they have Were made in cash up from 29.5% from a year earlier the highest Share in nearly a decade so this is a 9-year high in the share of people Buying houses with all cash as you can See right here a big increase compared To the previous month and also the Highest share we've had going back to The year of 2014 on top of that the share right now At 34% is much higher compared to the Preco levels here as well so for example The high in 2019 was around 27% so hu huge increase inre in the Number of people who are paying cash to Buy houses right now now here's the Methodology in the report here it says The data in this report covers uh 40 of The most populous metros uh Nationwide Going through uh data from 2011 the national numbers in this report Refers to these 40 biggest cities here September 2023 is the most recent month For which this data is actually Available it says here all cash
Purchases are making up a bigger piece Of the home buyer pie for two major Regions a fluent Americans who can't Afford to pay cash are more opt to buy Houses using cash uh due to the Expensive housing market when the income Necessary to buy a home is higher than It ever has been and elevated rates are Making buying a home in cash and avoid Avoiding interest paid altogether more Attractive now in regards to U income uh Being very high right now have a look at This because they reported this is Actually from redin reported on October 17th that home buyers must earn on Average $115,000 per year to afford to buy a Medium price home in the United States Here that's about $440,000 more than the Typical American household actually Earns so this report here says a home Buyer must earn $4,620 per month to afford a Medan us Price home up 15% from a year ago and up a whopping 50% compared to the start of this Pandemic that's the highest annual Income uh necessary to buy a house Nationwide um and also very quickly here There's actually a few metros here in Which you need to earn $400,000 per year to buy an average Price home in those areas that is San Francisco and San Jose you need income
Of 402 to 44,000 to buy a medium price home of $1.5 million in those two markets and by The way look at their monthly uh payment Here as well over $10,000 to buy an average price home in Those areas just absolutely insane uh in Regards here to saying here that people Are buying um houses using cash in order To avoid interest payments take a look At this this is absolutely insane here I Actually did an analysis looking at What's your average monthly housing Payment to buy a $700,000 home po Putting 20% down comparing a 3% rate to A 7.5% rate so at 3% your housing Payment would be $2,361 per month now at a 7.55% rate your housing payment would be Whopping 3,335 per month that's an increase of $1,574 more per month because of these Uh increasing in rates or this increase In rates on top of that regarding Interest paid look at this this is just Absolutely crazy here so based on a rate At 3% the total amount of interest paid Over the life of that 30-year fixed rate Loan would be $289,995 just under $290,000 now when looking at rates at 7.55% look at that interest paid $856,000 that's an increase of $567,000 more in interest paid over the
Life of that 30-year fix rate low and That my friends is one of the main Reasons why affluent Americans are Choosing to buy houses with extremely Large down payments or using all cash so Going back to rin's analysis here it Says the weekly average uh third-year Fixed mortgage rate hit 7.2% in September that's the average Monthly rate according to Freddy Mack The highest level in two decades however Actually moved higher in October um Nearing 8% according to Freddy Mack and Pushing the monthly uh mortgage payments Up by 20% from 12 months ago to all-time Record highs rates have of course come Down have come down since then but They're still more than double compared To early pandemic levels now Rising Rates are also uh deterring um home Buyers as well because of course given The fact that rates at 7.5% we're seeing A lack of demand of course course a huge Pullback in close home sales as well so It says Rising rates are deterring home Buyers who take out mortgages more than Deterring all cash buyers so for example Overall regarding all close home sales Uh we're down 23% year-over-year whereas all cash Sales only decrease by 11% during that Same time frame according to Red Fin's Uh senior Economist he stated the Following home prices are roughly 40%
Higher than they were before the Pandemic housing boom and soaring rates Have made the Divide even bigger by Adding more to the monthly payments uh They were talking about the Divide Between affluent Americans and more Middle class Americans here the Divide Is actually growing because people who Can afford to buy a $700,000 home with All cash are doing so versus uh middle Class families of course normally do not Have that opportunity here and he went On to say the following here affluent Americans are the only ones who can Avoid the sting of high mortgage rates Riffin also talks about how um home Buyers are putting a larger down payment As well because of course that decreases The amount of interest paid over the Life of the loan as well so for example A buyer who purchases a meting price us Home at around $413,000 with a 16% down payment would Have a monthly payment of around $3,117 per month at today's 7.76% rate in contrast a home buyer who Puts 10% down for that same house would Have a housing payment of $3,300 per month that's an increase of About $200 more because they're only Putting down 10% versus 16% and of Course some home buyers are putting Relatively large down payments down Because they're selling their houses and
Using the equity from from their sale to Buy a new house as well redin also Provided the areas in which they have The highest share of all cash purchases And also the lowest share as well so all Cash all cash purchases were the most Common in Cleveland Ohio look at that 49.2% of all buyers are using cash there That's crazy so half are using a loan or Half are all cash I would not want to be A buyer in Cleveland Ohio if I was using A loan uh very challenging Market as SE It sounds like uh next came West palach Florida 49% Jacksonville Florida also at 46.2% the least common was Oakland California at only 18% San Jose California and Seattle Washington all Quite expensive housing markets they Also provide some information regarding Um the share of people using an FHA loan An FHA loan is a popular loan that a lot Of first-time home buyers use in which Your down payment or your minimum down Payment is only 3.5% so FHA Loans were the most common Out of these 40 most populous metros Here uh in Riverside Riverside California and Southern California at 29.6% then we had Providence Rhode Island Las Vegas as well they were the Least common in San Francisco San Jose And anaha Less than 4% each in this report here as Well redin shared these 40 biggest
Metros here as well but again I won't Share that in today's video otherwise This video would be 15 hours long Instead I'll provide a link to this Article in the video description below Now before we wrap up this video I also Want to share this with you guys because Um this is from uh Fanny May posted on November 7th here it is what's called Their fenny May home purchase sediment Index or their hpsi so this is a monthly Survey they do and they ask consumers uh Regarding their um predictions regarding Mortgage rates home prices and also is It a good time to buy and also is a good Time to sell house right now so this Month a survey record 85% of consumers who respond to the Survey here indicated that's a bad time To buy a house with most respondents Citing high home prices and High rates As the primary reasons now one thing uh You guys should be be aware of as well Is that that's an all-time record high But also the all-time record low was Also set uh this month as well regarding Is it a good time to buy a house only 15% believe it's a good time to buy a House that's an all-time record low for As far back as this uh survey goes which Goes back to the year of 2010 also According to Doug Duncan who's fenny May's Chief Economist he stated the Following consumers Express even greater
Pism towards the larger economy this Month in addition to their ongoing Frustrations with the US housing market Please leave a comment below if you guys Feel uh frustrated regarding the US Housing market I for one am frustrated By it uh due to all these challenges That home buyers are facing I feel for You guys if you're if you're looking to Buy a House uh challenges as say he said here 78% of respondents told us the economy Is on the wrong track up from 71% last Month and they have overwhelmingly cited Inflation as the primary reason why also Consumers are fed up with high prices For many goods and services as well like I mentioned earlier on here they um ask Of people is it a good time to buy a House right now only 15% responded who Said it's a good time to buy a house Right now that's down from 16% from the Previous month uh meanwhile the Percentage who say it's a bad time to Buy a house uh increased from 84% to 85% uh meanwhile the percentage of People who said it's a good time to sell A house remained unchanged at 63% uh the percentage who said it's a Bad time to sell was unchanged at 37% in regards to home price expect Ations uh 40% believe that home prices Will go up in the next 12 months whereas 23% believe that prices will decrease
And 36% believe that home prices will Remain the same over the next 12 months They also ask about their expectations Regarding mortgage rates as well so 16% Believe that rates will go down in the Next 12 months whereas 47% believe that rates will increase And 36% believe that rates will remain The same over the next 12 months Meanwhile the vast majority of consumers Who respond to the survey here are not Concerned about losing their jobs uh Because 78% are not concerned about losing their Jobs over the next 12 months whereas Only 21% are concerned and lastly Regarding household income 69% believe That their household income will remain The same Over the next 12 months with that said Please comment below your biggest Takeaways from today's video also if you Guys got any value at this video Whatsoever then please hit the like Button I great appreciate that of course I appreciate you hope you guys have an Awesome day look forward to seeing you On the next [Music] Video [Music] A
