In New York City, purchasing a home with a mortgage is old news. Cold hard cash is the new king, particularly in Queens.
The Center for NYC Neighborhoods has tallied how many homes were sold in the Big Apple between Jan. 1 and June 30 and how the buyers paid. The boroughs saw 17,924 home sales during that period, of which 10,825 were done with cash, the Manhattan-based nonprofit advocacy group said.
Queens saw the most cash buyers (4,132), while the Bronx had the highest cash-to-mortgage ratio, according to the center's data. "In Council District 13 (West Farms, Soundview, Throgs Neck, Pelham Bay), for instance, there were 320 cash purchases compared to just five purchases with financing."
Real estate agents gave Homes.com a few reasons why cash is the preferred method among buyers.
"Sellers tend to prefer all-cash buyers because the risk is significantly lower," said Mable Ivory, an agent at Real Broker who specializes in properties in the Bronx. "With a cash buyer, sellers don’t have to worry about an appraisal coming in low or the deal being renegotiated. Cash buyers often waive appraisal and inspection contingencies altogether, and they usually close much faster. For a seller, that combination of certainty, speed and fewer hurdles is incredibly appealing."
To be clear, cash buyers have always been mainstays in New York and other major U.S. cities; however, the NYC Neighborhoods figures, as well as research from the National Association of Realtors, show that cash buying is claiming a larger percentage of home purchases than it did prior to the COVID-19 pandemic — particularly in Sunbelt cities like Houston and Miami.
Cash buyers dominated all New York City neighborhoods except for two in Manhattan — Harlem and Washington Heights, according to the nonprofit. There's a good explanation why those neighborhoods played out that way, Rebecca Blacker, a Coldwell Banker Warburg broker, told Homes.com. The northern Manhattan neighborhoods have homes where "price points are still relatively approachable compared to the rest of the borough, so they draw first-time buyers and long-term residents moving within their communities, who rely primarily on mortgages," Blacker said.
"Harlem and Washington Heights have always attracted a strong community of end-users: buyers who intend to live in their homes, rather than investors," Blacker said. "End-users typically finance. Cash buyers tend to focus on the luxury sector or on neighborhoods where investors are more active."
New Yorkers saw lower home prices in Manhattan earlier this year compared to what's available now — which also explains why cash buyers flooded the borough, Blacker added.
"From a psychological standpoint, when Manhattan feels like it is on sale, people act on that feeling," said Blacker, who specializes in properties there. "In the first half of the year, many buyers felt they could finally get into neighborhoods that had previously been unattainable. That combination of more reasonable pricing, more options and a renewed desire to be at the center of the city drove significant activity."
Brooklyn leads boroughs on foreclosures
The center's data tallied home foreclosures across the city, as well as home flipping activity. Brooklyn led all boroughs in the number of foreclosures at 3,587. Queens recorded the highest number of homes flipped at 369, but the center noted that the Bronx — particularly in Co-Op City, Eastchester, Throgs Neck, and Pelham Bay — also saw heavy flipping.
Ivory said the Bronx housing market has become the perfect petri dish for home flippers to thrive this year.
"Flipping is especially active in the Bronx because the borough still offers some of the most competitive pricing for multifamily properties," she said. "Investors can acquire distressed buildings at lower costs, renovate them and see strong returns. On the buyer side, multifamily homes are more attainable because lenders often require lower down payments and allow projected rental income to help buyers qualify. That combination — affordable acquisition costs for investors and easier financing for end-buyers— creates a strong environment for flips."