Home prices remain elevated in Whatcom County despite high interest rates. The graph below shows the median home price.
All-cash home sales are becoming more common, showing that in times of unaffordability, the all-cash buyers continue to step forward. Interest rates are still very elevated, making financing a home purchase very difficult. In Whatcom County, cash sales have increased in the past 18 months to almost 30% of all transactions.
Local Trends: Whatcom County’s All-Cash Sales
Recent Rise: Cash sales in Whatcom County rose after the increase in interest rates
Regional Trends: Whatcom County is much higher than other areas on the MLS. This is driven by King County, which was only 17% in 2023.
National Comparisons
National Trends: The rate of cash sales nationally has continuously been higher than in Whatcom County.
Florida: Places like Florida, where many retirees are purchasing homes, has all cash sales much higher than in Washington State. The map below shows 42%, which is an older map from 2016, but the percent is even higher today. Other reasons for a higher concentration of all-cash buyers would be more investor purchases or in-migration patterns.
Why Are Cash Sales Growing?
Higher Mortgage Rates: Cash buyers avoid costly loans. It may be that the buyers that require a loan have decided to wait. As a result, the percentage of cash buyers is increasing. The affordability index below shows how difficult it is to buy a home that requires financing.
Equity Migration: Sellers from high-priced areas buy with cash locally in an area they see as more affordable. This exists in Whatcom County with buyers from Seattle, California, and Vancouver, BC.
Investor Interest: In some parts of the country investors are active buyers. This is not a factor in Whatcom County. There are very few investor buyers because the rate of return for a home as an investment is much higher in other parts of the country.
Conclusion
The initial question was "Are all-cash buyers driving up home prices?". In truth, only 30% of buyers are paying cash. The other 70% are still getting financing and are still able to make it work. The all-cash buyers have increased as a percentage, but not to the point to drive the market. There is still ample demand overall to keep home prices up and to see continue appreciation, even from buyers requiring a mortgage.
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