Cash is King in Chicago!
Recently, the increase in all-cash real estate purchases in Chicago have made news. However, now there is more data made available that can be used to further dissect the influx of cash real estate purchases in Chicago and the correlation between the locations of the buys. Data from DePaul’s Institute for Housing Studies just released this interesting data that was collected during 2012.
This data clearly shows that there were three main locations that were prominent areas of cash-only real estate purchases in Cook County. These homes were labeled as non-distressed, which means that they were not in foreclosure or necessarily sold to investors looking to make a profit. These were simply typical non-distressed home sales that were completed with cash-only purchases.
After identifying the three different groupings, assumptions can be attributed to causes. However, here are the three basic groupings that were identified by data from DePaul’s Institute for Housing Studies:
- Englewood- Almost 87% of home purchases in this location were made using only cash. This high percentage is almost four times the average for the city of Chicago.
- The census tract shows that 65% of the homes sold at the Loop in 2012 were cash purchases.
- If just numbers of cash-only purchases are taken into consideration, the Near North Side had the most cash real estate purchases totaling at 459. This totals to about 48% of the total cash-only home sales, which is about two time larger than Chicago’s city average.
Now that these groupings have been identified, now comes the more complex part of deciphering the cause:
- Most of the Englewood cash real estate purchases were made by Norfolk Southern Corp. This is due to the expansion project that is taking place to modify the freight facility. This large project is bringing jobs and an influx of prosperity to the neighborhood.
- Almost all of the real estate cash purchases that can be attributed to the Loop occurred in one building at 200 N. Dearborn. This is an apartment tower with more than three hundred condos. The increases in cash purchases can be attributed to the ten percent discount that was made for cash buyers.
- The Near North Side of Chicago is more privileged and the amount of cash purchases can be attributed to the fact that wealthy individuals have more cash and are also gaining faith in the Chicago real estate market. Cash transactions are very common for properties that have a million dollar price tag and up.
In Conclusion
Cash is King. Whenever a seller gets a cash offer and financed offers, the cash offer has the upper hand. Many times sellers will take a lower cash offer than a higher financed offer. Our company has taken lower cash offers on multiple occasions because financed offers can take a long time to close and may not close at all due to strict underwriting guidelines and loan officers that are unaware of all the rules.
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