Item — HN Reader

> It’s paradoxical that all-cash became the norm in a period where mortgage rates were at all time lows…

Cash transactions have less friction and chance of falling through, so it makes sense that sellers prefer cash purchases. Consequently, you see cash offers because buyers know that sellers prefer - you essentially jump to the front of the line.

2 comments

I guess my core question is: do they keep the cash in the house, or do they use cash just as a vehicle for the purchase, and then finance the cash out of it?

Because there was a concurrent trend to refinance houses at 2% loans and put the cash in the stock market, which is assumed to beat that 2% over the duration of the loan.

And just to make the connection explicit: if lots of buyers are making competitive offers because rates are low and money is cheap, then that's going to encourage the people who can afford to pay cash to make an all-cash offer where otherwise they might not have.