Reversing a downward trend observed since 2015, the portion of all-cash home sales in the Reno and Sparks, Nevada market climbed to 21.0 percent in 2018.
Of the 5,972 homes sold in the Reno-Sparks area in 2018, 1,254 were cash purchases (as opposed to financed), equating to 21.0 percent. That number is three percentage points higher than the 18.1 percent cash purchases portion observed in 2017.
This 21.0 percent is also consistent with the portion of cash sales observed nationally.
Interestingly, though cash sales accounted for 21.0 percent of residential home sales in the Reno-Sparks market, volume-wise those cash sales accounted for 25.0 percent of overall sold volume in 2018. That indicates a greater proportion of higher-priced homes being purchased for cash relative to being financed.
Looking at the median price points for cash purchases vs. non-cash (i.e. financed) home purchases, we find:
- 2018 median sales price for cash purchases: $410,000
- 2018 median sales price for non-cash purchases: $365,890
…or more than a $44,000 differential. [Incidentally, the median sales price for all home sales in 2018, regardless of how purchased, was $375,000.]
How were non-cash home purchases financed?
Financing, of course, remains the predominate means of purchasing a home. In 2018, 60.0 percent of home purchases were financed with a conventional mortgage. This number was up over the 54.9 percent observed in 2017 for conventional financing.
FHA and VA financing accounted for another 18.0 percent of home purchases. See the table below for the breakouts going back to 2012.
Another trend I notice from the data in the table above is the increase in the portion of home purchases being financed by conventional mortgages. What is driving this growth? Rising interest rates would seem to hinder, not spur conventional financing. Are lending guidelines changing? Are borrowers becoming increasingly credit-worthy?
If you work in the residential lending side and are reading this post, I’d love to hear your insights in the comments below.
Note: The home sales data reported above covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – January 8, 2019. This information is deemed reliable, but not guaranteed.