Intuitively, I would say the number all cash buyers is a pretty small number in every market. Especially in a low interest rate environment.
Most people with the means to pay cash for a property would likely be savvy enough to understand that that they would be better off getting a jumbo mortgage at 3.25% and deploying that capital at a higher rate elsewhere.
In hot markets you see a lot of cash buyers because they don't want to lose the deal. Some will then finance afterwards, and a lot of them are flippers who will sell the house a few months later.
> Most people with the means to pay cash for a property would likely be savvy enough to understand that that they would be better off getting a jumbo mortgage at 3.25% and deploying that capital at a higher rate elsewhere.
Sellers want buyers to pay cash to reduce risk of the transaction failing. Fewer parties in the transaction is less risky. Buyers can always refinance the house after they have the title.
I’d say it’s more interesting to look at recent immigrants income vs monthly payments.
Existing residents aren’t necessarily buying new houses at 8x multiples. And the new arrivals to an area might be tech workers pulling in $400k, and can afford that $1.2M house with just a 3x multiple.
I'd say it's more interesting to look at income-after-taxes vs monthly payments.
The same payments/gross income ratio for a worker earning a median salary is a lot better than for someone earning $400k (as the payments to net salary ratio for the latter is higher).
Not to mention the probability of sustaining the income at the current level in the next 20 years is probably different as well.
