Cash deals are by no means dead, but they aren't dominating the South Florida housing market the way they once did.
Sales without mortgages are happening less frequently as investors flee and traditional buyers gain easier access to financing, industry observers say.
In the second quarter, 46 percent of the home and condominium sales in Broward, Palm Beach and Miami-Dade counties went to cash buyers, down from 49 percent a year ago and from 62 percent in 2014, according to Attom Data Solutions, a research firm based in Irvine, Calif.
Cash sales peaked in the first quarter of 2011, when more than seven out of 10 deals didn't involve a loan.
"The market has dramatically shifted," said Mike Pappas, president of Keyes Co. in Miami. "Cash drove the market in the bottom-feeding and opportunistic times, but today we have a real market with real buyers, and they need mortgages."
Investors descended on South Florida in 2011 and 2012 as the six-year housing bust was ending. With prices hitting bottom, bargain hunters with fistfuls of cash scooped up foreclosures and short sales for pennies on the dollar.
The competition was so fierce that some real estate agents were telling clients who needed mortgages that they had little hope of winning bidding wars for the homes. Sellers much prefer cash to financing because they know the deals are likely to close more quickly and with fewer hassles.
Today, though, with values rising and distressed homes in short supply, investors who remain in the market are all competing for the same few properties, said David Dweck, founder of the Boca Real Estate Investment Club.
"The days of the high-profit flip are over, for sure," he said. "There will always be foreclosures, but they won't be at the level we experienced in the past."
During and after the housing bust, lenders tightened underwriting standards, making it difficult for first-time buyers and others to qualify for mortgages. But those requirements have gradually loosened as the housing market has recovered, allowing more buyers to take advantage of historically low interest rates.
Housing analysts expected the Federal Reserve to increase rates this year. But instead, the Fed has only "tweaked" them, keeping the market favorable for financing, said Jim Flood, regional manager for Supreme Lending in Fort Lauderdale.
A typical buyer with good credit can still secure a 30-year, fixed-rate mortgage of less than 4 percent, he said. A 15-year mortgage can earn an interest rate in the 3.25 percent range, Flood said.
"The bottom line for South Florida home buyers is that it's still very attractive to borrow today. Very attractive," he said. "When you're talking about rates at 4 percent or under, that is exciting to people."
In many cases, buyers are wealthy enough that they don't require mortgages, but they're choosing to get financing anyway because they can put their money to better use elsewhere, said Stephen B. McWilliam, president of Florida State Realty Group in Fort Lauderdale.
"You make a lot more when you leverage your money with a mortgage," he said.
That's what Ron Kurzman hopes to do.
The 41-year-old developer in Miami is buying a five-bedroom home in the Lake Ida section of Delray Beach. He said the $1.4 million property is perfect because it has an above-the-garage room that his wife can use to teach mommy-and-me Pilates classes. The deal is expected to close at the end of August.
Kurzman said he could pay cash but ultimately decided he'd rather have a mortgage.
"I'm not naive to the fact that the money is at risk in the [stock] market," he said. "But I did the analysis and realized that the money would be better utilized elsewhere than being tied up in the home."
While single-family home buyers are realizing the benefits of mortgages, condo sales in South Florida are still predominantly all-cash due to financing restrictions, said Ryan Paton, president of Capitol Lending Group in Fort Lauderdale.
Government-backed mortgage companies Fannie Mae and Freddie Mac won't insure loans in buildings with too many investors or where the condo documents don't sufficiently detail the amount of available reserves, Paton said.
Those rules, put in place during the housing collapse, have been relaxed in recent years but are still a major factor in why most condo sales are for cash, according to Paton.
Still, he doesn't think it would be difficult for condo boards to make the necessary changes and fix the problems that are holding back more sales to buyers who want or need financing.
"If the condos would do their homework, they could put themselves in position to open the doors to so many more buyers," he said.
