Over the past 10 years, the number of all-cash home purchases has increased nearly 5 percent in Arlington, with year-to-date all-cash sales (through October 2019) coming in at 18.4 percent. Combine that with limited inventory, rising home prices, and the Amazon headquarters growth, and you’ve got the potential for an increasingly challenging and competitive homebuyer market in the coming months. Such cash sales are great for sellers, and buyers simply need to remain aware that they may have stiff competition that demands they craft the strongest offers possible.
Two questions still linger, however: Will this somewhat feverish atmosphere continue in Arlington, and will it spread to surrounding areas? It’s hard to say at this point, but here’s what the data are telling us.
MarketStats by ShowingTime gathers information from Bright MLS, the area’s multiple listing service, and breaks down financing choices on sold properties in a variety of categories. These include: assumption, cash, conventional, FHA, other, owner financing and Veterans Affairs.
According to their data, all-cash home purchases in Arlington were 13.1 percent of sales in 2010. Over the four subsequent years, all-cash buys climbed to a peak of 16.4 percent in 2014. From 2015 to 2017, they hovered between 14.1 and 14.4 percent. In 2018, however, all-cash buys in Arlington jumped to 17.1 percent, and they’ve topped out at 18.4 percent so far this year.
Although not perfectly clear, an increase in cash buyers could indicate an increase in investors focusing on the particular area; it also could be the number of people purchasing property for their personal residences simply have the disposable cash to buy property outright. Either way, it makes the process and competition for homebuying more challenging.
Cash buyers typically mean strong contracts in the real estate business. All cash oftentimes gives buyers the ability to waive certain contract contingencies, which make their offers stronger. For example, an all-cash buyer might have an appraisal contingency, but the purchase will not rely on financing approval, giving buyers one less reason to withdraw from a contract. They also could waive the appraisal outright as well. There are a whole host of advantages for a seller when they have a cash buyer, including an often shorter period of time from contract acceptance to final settlement.
This doesn’t mean buyers needing a loan are out of luck in Arlington—or the rest of the area for that matter. Even with the high rate of cash purchases in Arlington, more than four out of five sales are financed with loans.
What does that mean for buyers needing a loan? It means there’s some competition out there, but with a strong lender, a clean and clear contract, and an agent who knows how to put that all together is crucial. D.C. Region Real Estate has lender recommendations and great information on putting together the best offer possible.
The heat at which Arlington is selling and the number of all-cash contracts represents the uniqueness of individual buying segments spread throughout the area. Take Washington, D.C., for example. From 2010 through 2015, cash buyers made up more than 20 percent of buyers every year, except for 2012 when they made up 19.4 percent. In 2016, all-cash buyers in D.C. dropped to 18.5 percent and then increased to 19.3 in 2017 and 19.8 in 2018.
Remarkably, however, as Arlington made the jump from 17.1 to 18.4 percent—it’s highest by far in 10 years—D.C. all-cash buyers dropped from 19.8 percent in 2018 down to 17.2 percent so far this year—the district’s lowest percentage in 10 years.
Also, as close as the City of Alexandria is to Arlington, Alexandria has nowhere near the number of all-cash buyers. In 2010, all-cash buyers made up just 11.4 percent of Alexandria city purchases. That number increased into the 14 percentile range from 2011 to 2013, and has floated between 12 and 13 percent every year since.
Fairfax county is also cruising along with a comparatively smaller percentage of cash buyers—anywhere between 10 and 13 percent over the past 10 years—with its lowest point in 10 years coming so far this year, with 10.6 percent of purchases being all cash.
Regardless of a purchase in Northern Virginia, Washington, D.C., or Maryland, for that matter, there’s typically going to be some competition, and an all-cash buyer can be formidable when you’ve found that house you love. It doesn’t mean they always win the contract. The key is to ensure you have all of your ducks in a row and are taking advantage of every opportunity to make your offer the most appealing. Understanding your options and really knowing the market are good starting points.
Christopher Prawdzik, an Accredited Staging Partner® Real Estate Agent, and his wife Angela Logomasini are licensed Realtors® with Samson Properties in Alexandria. Operating as D.C. Region Real Estate, they serve the Virginia, Washington, D.C., and Maryland real estate market and offer comprehensive real estate services, including 4½% full-service listings.
© 2019 D.C. Region Real Estate