cash buyers in fairfield squeeze an already-tight housing market
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By Alfred Branch | Published on February 10, 2023
FAIRFIELD, CT — Homebuyers who pay cash in Ridgefield are making it more difficult for people who need to borrow money to buy properties, according to a Washington Post analysis of data from the real estate company Redfin.
High prices are slowly starting to decline, but a low inventory and steep home mortgage costs already put homeownership out of reach for many buyers, the analysis found. What’s also contributing to the difficulty is an 8 percent increase in the number of people who pay cash, according to the analysis.
About a third of U.S. homes (31.9 percent) were purchased with all cash in October, up from 29.9 percent in October 2021, and the highest share since 2014 when the housing market was rebounding from the foreclosure crisis in the Great Recession, according to Redfin.
In April 2020, only a fifth of homes were purchased with cash, a record low.
According to The Post’s analysis, which looks at 2022 home sales by ZIP code, 31 percent of homes in and around Fairfield's 06824 ZIP code were purchased with cash.
Inside and near Fairfield's o6825 ZIP code, 22 percent of buyers paid in full at the closing.
The trend began during the pandemic as mortgage rates began to rise, according to Chen Zhao, Redfin’s lead economics researcher, who said the affluent are motivated to pay cash to avoid high interest rates on mortgages.
A separate report from the National Association of Realtors found first-time homebuyers in the United States are typically white, wealthy and older. First-time buyers made up only about a quarter (26 percent) of buyers, down from 34 percent in 2021. Their average age was 36, up from 33 the previous year, and the average age of repeat buyers climbed to 59 — both all-time highs.
Overall, 88 percent of buyers were white or Caucasian, the report showed.
“Only the wealthy are essentially buying homes,” Lawrence Yun, chief economist at the National Association of Realtors, told The Post. “If this trend was to continue, that means something fundamentally is wrong with society.”