CHARLOTTE, N.C. — Some homeowner hopefuls looking for their forever home are asking where's the money because of inflation and rising interest rates.
There are a number of reasons why people are choosing to pay for their new home in cash.
David Hoffman of Hoffman Realty in south Charlotte said the obvious one is because interest rates are at a 25-year high.
"If a rate is 8%, why would you want to borrow at 8?" Hoffman asked. "You can't make that money anywhere right now, not even in the stock market. That's why more people are putting money down and paying cash if they can."
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Hoffman explained during the pandemic, many businesses shut down and employees lost their jobs because of struggling businesses. However, others also created a lot of wealth, with many selling their homes at top value or getting out of the stock market at the right time.
"Between stocks and real estate, you saw a lot of people put hundreds of thousands and millions of dollars in the bank," Hoffman said. "And their net worth went up tenfold."
Lifestyle changes also played a part.
"Now they're thinking, 'I don't need as big of a home but I still want my home -- I don't need the big backyard or extra rooms for the office because I'm now back at the office,'" Hoffman said. "'But I want my forever home and I'll pay cash because I sold my house at the peak and sold my stocks at the peak.'"
The Charlotte realtor added one of the advantages of a cash purchase is having more buying power.
"That $500,000 home a year ago, was trading for $550[K] to $600[K]," Hoffman said. "Now it's trading for $450[K] to $475[K]. So yes, while rates are high at the moment, that will soon change in the next year or so ... But prices are at a 4-year low. Inventory is picking up, so you have more competition for the seller but more inventory for the buyer. But you're also not going to have all of the bidding wars."
Hoffman said if someone is looking to buy now and have the cash to put down, he recommended finding out what matters most to the seller to price down to the seller's bottom line.
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