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All-Cash Home Sales Hit New High as Mortgage Rates Fall to 2014 Low

All-cash deals hit a record 43% of home sales during the first three months of 2014, according to RealtyTrac. That's up from 19% a year earlier and the highest level reported since RealtyTrac began tracking the deals in early 2011.

"Inventory shortages, as well as lending regulations favor the all-cash buyer," said Chris Pollinger of First Team Real Estate in Southern California.

Even buyers who would ordinarily finance their purchases are making all-cash offers to appear more attractive to sellers, said Daren Blomquist, vice president at RealtyTrac.

Interestingly, the increase in cash sales is occurring despite a downturn in purchases by institutional investors -- firms that have been active in buying foreclosures and short sales with cash.

According to RealtyTrac’s report, institutional investors — entities that have purchased at least 10 properties in a calendar year — accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013 to the lowest level since the first quarter of 2012.

Miami, New York, Boston and coastal California cities are attracting a lot of foreign buyers who are paying in all cash, according to Jeff Meyers, founder of Meyers Research.

In Miami, Latin Americans are putting down deposits of 50% or more on apartments in the early stages of development, enabling builders to self-finance the rest of the building or leverage bank loans at attractive rates. The buyer then pays the balance in cash at the time of occupancy.

In California, Chinese nationals and immigrants are "parking their cash in single-family homes," said Meyers.

In Irvine, Calif., for example, 80% of sales over the past year were to Chinese buyers, he said.

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