By DON FENLEY

TRI-CITIES, Tenn. – One of the first things that pops out when reviewing how existing home sales were financed last year is the share of cash sales wasn’t as great as the attention they got. In almost every conversation, it seemed cash sales by new residents flush with the proceeds of selling their homes elsewhere were cited as an issue driving the local market funk.

But, cash deals accounted for only 30.8% of all sales – up from 30.3% the previous year. In other words, they had less impact than they got credit for, and there were not that much higher than the normal recent share. They were also aligned with the national cash sales market share performance.

One thing cash sales did accomplish was set a higher average discount from list prices than other financing methods. That was a factor that put downward pressure on the overall average and median single-family and condo list price. And, the jawboning about cash buyers also tends to both increase competition and scare away a subset of buyers.

Most of last year’s sales – like previous years – were purchased with conventional loans. They accounted or 41.1% of all sales, and that was down from 40.7% the previous year. It was down primarily due to increases in FHA and THDA loans. USDA loans were also down.

VA loans were up a .5% and remain one of the most under-utilized options for both home loans and in the effort to attract new residents. They’re under-utilized because the median sales price is typically equal to or a little higher than conventional loans and as from the new resident perspective the demographic for veterans is above the local non-veteran demographic on most fronts – their household incomes and education levels are two examples.

Here’s a capsule version of how the top five financing methods looked for local existing home sales last year.

Conventional loans.

• 47.1% of sales
• $300,000 median sales price
• -$8,036 average difference between sales and list price

Cash sales

• 30.8% of sales
• $243,500 median sales price
• -$9,995 avg. difference between sales and list price

VA loans

• 8.99% of sales
• $300,000 median sales price
• -$3,815 avg. difference between sales and list price

FHA loans

• 10.3% of sales
• $225,000 median sales price
• -$1,721 avg difference between sales and list price

USDA loans

• 1.6% of sales
• $207,700 median sales price
• -$1,482 avg. difference between sales and list price

Categories: REAL ESTATE