yes, exactly right! Whenever I hear that someone paid cash for a $500k house, I know that this was not a normal middle-class family. A middle-class family does not have $500k in cash sitting around. Anyone who does have $500k in cash likely earns an income that enables them to afford a much more expensive home. These HAVE to be big $$ investors looking for inflation hedges.
I just hope that when this house of cards falls, we won’t bail out the elites again...
People who “flee” California and ditch their half-million dollar bungalow want to stash the money from their old home in the purchase of their new home.
They want to avoid capital gains taxes.
I paid cash for a $325K house.
Old house with mortgage burned down. Insurance on structure paid off the mortgage. Sold the lot with the burnt out shell for $325K.
Took the $325K to New Mexico and bought a house for cash that was 3X bigger than the old house.
Some people may have cash because they recently inherited their parents’ old home, and sold it. You never know. They intend to preserve the equity in their inheritance, and move up to something better.
“yes, exactly right! Whenever I hear that someone paid cash for a $500k house, I know that this was not a normal middle-class family”
That’s not necessarily true; Many folks have homes they have owned for 25 years and are looking to move. Their old mortgage was likely near paid off and they have enjoyed huge appreciation on their now home, so with the sale, they got a huge slug of cash. Or, they inherited their parents’ home and can sell it tax free for giant gain. It is ALSO possible that they financed the purchase with alternative (eg; private) means than a bank loan and it *looks* like a cash buy, but it is not. In other words, they could not qualify for 2-3% financing and bought using much harder money, hoping to refi in a couple of years after their loan will be “seasoned” = good payment history. Other than that I appreciate your sentiment. I agree, a working person or couple is not likely to have that big a slug of cash.