WEST PALM BEACH, Fla. — From St. Lucie County to Boca Raton, the real estate world is a seller’s market. These days, sellers are running for cash offers, which leaves many buyers feeling squeezed out.
It seems like buying a home has never been harder in Florida.
People looking to own a home are up against a pile of cash or something relatively new in the last decade – a faceless investment company.
Larry Scott was simply looking to buy a first home for his growing family. Ten times he tried to buy a house and lost.
“After the first one we found out it was conventional cash and then people were like, ‘Oh well, they can close quicker’ or ‘Hey, I’m sorry they paid in cash,” and that was the most important thing.” said Scott.
In a wild real estate market, cash is king and these days there are more buyers with cash.
The Florida Realtors trade association said last year that more than 40% of home sales in Palm Beach County were cash, an increase of nearly 30%.
“There’s a lot of people who have money. There’s a lot of money that’s been printed,” said Jeff Lichtenstein, the founder of Echo Fine Properties in Palm Beach Gardens. “People are running out of money, but then you run into hedge funds and other institutions that are also in the market.”
Investment firms and hedge funds buying homes made headlines last year when the The Wall Street Journal reported an investment company bought an entire community of houses in Texas.
Sunny markets like South Florida are prime choices for businesses.
Online real estate brokerage Redfin studied the hottest real estate markets and found that in the third quarter of last year, investors bought 18% of homes and three out of four single-family homes.
In the West Palm Beach market, the figure was 15%, up 8% from a year ago.
Karan Kaul, of the Washington, DC-based Urban Institute think tank, said corporate buying of homes started in 2011 and has been going on ever since.
“They want to buy homes for the best possible price,” Kaul said. “They want to fix them as efficiently as possible, and they want to put them on the market for rental as soon as they can.”
But Kaul insists that buying an institutional home does not crowd out buyers or inflate prices as much as the housing shortage.
Scott came up with a new strategy to compete with cash buyers and institutions by getting pre-approved.
“I would look to get a subscription first,” Scott said. “Because once we’ve done that, the first house we’ve visited is done.”
Scott bought a new home for his family in St. Lucie County.
It’s an area that many Floridians are now discovering as cash buyers and investment firms have their eyes set on Palm Beach County.
The fact remains that the American dream of owning a home is harder than ever to achieve.
All cash home purchases by investors and individuals mean homes sell much faster.
Palm Beach County homes last year were on the market an average of 15 days, up from 37 days the year before.