Cash vs Financed | The Source Weekly - Bend, Oregon

Cash vs Financed

Reviewing the second half of 2022

I wanted to start by thanking so many of our readers for engaging with us and asking great questions! I am always happy to research and/or answer your real estate related questions that you may have. Speaking of which, I was asked last year by a reader about the number and ratio of cash versus financed home purchases in Bend. This question was asked as rates had risen and were predicted (accurately too) to continue to rise through the remaining months of 2022. My hypothesis (along with most people's) would be that the number of cash transactions would increase from the first two quarters of 2022 compared to the final two quarters of 2022.

If you go back and review the Aug. 10, 2022, article, we answered that in quarter one of 2022, the ratio of cash purchases to financed ones was about 25%. In quarter two of 2022, that ratio was 27% (thanks to the amazing customer service department at Western Title who provided some updated information on the second half of 2022). As we expected, cash transactions rose significantly in quarter three, jumping to almost 36%! In the third quarter, there were 889 transactions in Bend, and among them, 326 were cash, and the fourth quarter saw some additional growth. In the final quarter of 2022, there were 746 sales in Bend, and 293 were cash, which represents about 40% of transactions. Now, for those who are not in real estate, the total number of transactions is down nearly 30%, so the real estate market has cooled when compared to what we saw in 2021. What is in store for the RE market in 2023? Likely, it will be similar to the second half of 2022.

What does all this data mean? Honestly, not a ton, especially when considering that Bend is a recreation destination, a retirement and vacationing community predominantly. Are increasing amounts of cash purchases indicative of an impending crash or bubble bursting? No, in fact after sifting through some National data from NAR, there was an interesting data point. This point was that 2022 saw the highest levels of cash purchases since 2014, when the nation was finally coming out of the last major recession. One other thing to be aware of is that all "cash" purchases are not the same, as some certainly included some "bridge financing" or simply taking out a mortgage after the purchase, which is common, especially in low inventory or competitive markets.

Since this always seems to get discussed in Bend, I wanted to bring it up. Of the 293 cash transactions, only 31 of them were from California. The overwhelming majority of them — 231, or 79%, are from Oregon, so we can at least somewhat dispel the "out of state" boogeyman with cash to burn. Of the properties that sold in the fourth quarter of 2022 that were financed, 92% of them were already living in Oregon. As you would expect, it is pretty rare to move out of state and purchase immediately, but it does happen.

I wanted to take one more opportunity to invite those of you who read the Source Weekly to reach out to myself at [email protected] with any real estate related question(s), and I would be happy to answer or look into them. Thanks again for the great questions, everyone!

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