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> But some are homeowners who sold a property and use the proceeds to pay for another one, in which case there's not much change in net demand. That's not a ca
by danans 4y ago
> But some are homeowners who sold a property and use the proceeds to pay for another one, in which case there's not much change in net demand.
That's not a cash offer unless the property being purchased is far lower in purchase price than the profit off the sale of the first home (i.e. due to downsizing, or moving from a much higher to much lower cost area), in which case it is a different housing submarket, and there could be a net local demand increase.
- Noumenon72 4y agoIf I understand correctly, what you're saying is that selling for $200k usually means you had $120k left on the mortgage, so you only get $80k and can't make a cash offer for a new $200k home.
- danans 4y ago> so you only get $80k and can't make a cash offer for a new $200k home. Or if you are buying an $80k property with the proceeds, it is so different than the sold property - either much smaller or less desirable in some way - that you are buying in what is effectively a different market altogether.
- nostrademons 4y agoOr the buyer is a long-time homeowner who has largely paid off the mortgage on their original residence, or at least paid it down such that inflation + payments has increased their home equity to near the purchase price of a new home. This includes nearly all senior citizen purchases, but it's also a surprising number of 40/50-something wage earners who bought in HCOL areas around 2010, saw their $800K homes appreciate to about $2M, have paid the mortgage down to about $450K (or paid it off entirely, using stock price appreciation), and also have a couple million in appreciated stocks from saving abundantly during the 00s and 10s and enjoying the stock price appreciation.