The real estate market in New York City is experiencing a notable shift as cash buyers make a strong comeback. A recent analysis of citywide sales data revealed that all-cash transactions now constitute a larger market share than ever before. In Manhattan alone, cash deals account for a staggering 60% of condo sales this year, surpassing any previous record. Similarly, cash buyers have successfully secured 37% of condo deals in Brooklyn and 40% in Queens, both representing unprecedented levels since at least 2018.
One of the key factors driving this trend is the rise in mortgage rates, which have surpassed the 6% mark. As borrowing costs increase and the availability of for-sale homes becomes limited, cash buyers enjoy a distinct advantage. Sellers, aware of their leverage, are increasingly inclined to wait for cash buyers, as they offer a higher level of certainty in completing the transaction. By avoiding the potential risks associated with a buyer’s inability to obtain a mortgage, sellers can safeguard against the possibility of a contract falling through.
For buyers who intend to rely on mortgage financing, there is a strategy that can help level the playing field with all-cash bidders. By waiving the financing contingency, which essentially means committing to closing the deal regardless of whether financing is secured, these buyers can demonstrate their commitment and enhance their competitiveness. However, this approach has its risks. Failing to close the deal would result in the loss of the deposit made at the contract signing, which typically amounts to 10% of the home’s purchase price.
TIP: Newly built apartments are good places to start for all-cash buyers looking for the best bargain, as the immediacy of a cash purchase can help developers save on carrying costs.
