Buying Houses with Cash

In today’s Wall Street Journal, front page, is an article entitled Cash Buyers Lift Housing: Bargain Hunting Boosts Prices in Depressed Cities; Broader Asset Rebound Spreads.

With housing at or near rock bottom in some markets, some buyers are pouncing on unbelievable “steals” and paying cash to boot! The article mentions a 62-year-old buyer who was interested in a home in Stone Mountain, Georgia. A 1918 bungalow with three bedrooms and one bathroom was listed on the market as a “short sale” originally for $159,000, then dropped to $129,000, then to $79,000. The 62-year-old buyer offered $50,000. Why such a low price? This buyer stated, “I figured, it wasn’t like I needed a place to live. I can afford to be a little cocky here.” This 62-year-old buyer ultimately purchased the house for $52,500.

Another buyer, 73-year-old, purchased three condos in Miami Beach with cash. He doesn’t plan to rent any of the condos. He and his wife (with two dogs) will live in one condo, his son might occupy the 2nd condo and the 3rd condo will house an older dogs and guests.

What impression did this article leave on me? First, well-to-do seniors were purchasing homes at rock bottom prices. Second, these well-to-do seniors have a “take it or leave it attitude” regarding these properties.

I was disappointed there were no “Dave Ramsey” faithfuls profiled who purchased their homes with cash. Or someone below the age of 50 buying their homes with cash.

Let’s be honest: the 62-year-old and the 73-year-old are the exceptions, not the rule. Most Americans who are interested in buying a home will have to obtain a mortgage to help finance the purchase.

For me this article reinforces the persistent gap between the haves and the have-nots. And there are more Americans in the latter category than the former. The stock market is rising, certain wealthy individuals are able to pay for homes with cash. But, for most Americans, the “Great Recession” persists. This article is just about the elite few (oh, that’s right, I’m reading the WSJ, for the elite few).

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