Friday, August 16, 2013

A Shocking Number for Housing

As the housing market continues its recovery, there was a bit of a shocking study out from Goldman Sachs yesterday: More than half of all the homes that were sold in 2012 and that have been sold in 2013 have been all-cash transactions, without a mortgage. That's a huge change from before the housing market crash, when only 20 percent of transactions were all-cash.

Before the market collapsed, the average home buyer financed about 67 cents for every dollar spent on the transaction. Now that figure has dropped to just 44 cents for every dollar.

Given that the number of homes sold has also fallen off sharply since the housing market peaked, the total volume of mortgages is now much less than it was less than a decade ago. In 2005, purchase-mortgage origination volumes were $1.5 trillion, according to the Goldman Sachs study; for the past two years, that number has been closer to $500 billion.

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