Redfin noted that the other reason mortgage applications had dropped, aside from the increase in the number of cash buyers, was due to the drop in supply.
Casasnovas said the two were related. “Some of my clients have been outbid because of cash offers, and the reason for that is the low inventory. I am seeing an uptick in cash offers because cash is king, and they don’t have to deal with the mortgage process as much.”
Patrick Stoy, the owner-broker of Wilmington-based MC Mortgage Group, agreed that wealthier buyers keen to purchase a new or second home had far more options at their disposal, both in terms of the buying process and the choice of property.
“They’ll either have a home equity line on their existing house, or they will actually do a cash out on their primary residence because they can get good rates on that and win the contract,” he said.
In these instances, he resorted to helping clients by leveraging their assets, with the added benefit that he would not have to worry about appraisals and financing.