Foreclosed propertyJustin Sullivan
Remember the NINJA mortgage? No income, no job, no assets.
Exotic U.S. mortgages are disappearing in the Spartan post-meltdown era, supplanted by a decidedly old-school mode of financing - cash.
In what experts say is a sign the battered U.S. housing market is cautiously finding a bottom, more Americans than ever are choosing to plunk down cold, hard cash to buy homes.
Cash was the currency of choice in 27 per cent of all homes purchased in the United States in March, according a survey by the U.S. National Association of Realtors (NAR).
That's up from 18 per cent a year earlier - and well above the historic norm of less than 10 per cent. Even those who do get mortgages are making much larger down payments than in the past.
"We've had this huge pendulum swing - from liar loans, no-doc loans and no-income loans - to no loans at all," NAR spokesman Walter Molony said. "We've gone to the opposite extreme."
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Blame it on a combination of extremely tight credit conditions, a glut of foreclosed properties, sellers eager to get their money out without strings attached and a surge of buying by investors, who see the best real estate values in years and don't want to share the profits with lenders.
Even with interest rates at historic lows, banks are no longer offering the generous terms that were once commonplace.
Nowhere is this more the case than in the areas of the country that saw the most speculative excess in the boom years - California, Florida, Nevada and Arizona. In Miami, for example, well more than 50 per cent all transactions are now in cash.
"Nine out of 10 deals we do are all cash," said Miami real estate agent Peter Zalewski of Condo Vultures Realty.
"It's virtually the only way to get a deal done in south Florida, especially if the property is a condo."
The preference for cash is a function of both cautious lenders and nervous sellers, suggested Mr. Zalewski, who specializes in brokering bulk condo sales.
After being so badly burned during the boom, major national lenders have virtually pulled out of the Miami housing market, he said.
At the same time, sellers - many of them banks holding foreclosed properties - want the certainty and expediency of cash. In this new show-me-money environment, buyers with cash are beating out those waiting for financing.
"Sellers would rather take a lower price and close with all cash in two weeks, instead of waiting 30 to 60 days for a deal at a higher price that may or may not happen," Mr. Zalewski explained.
And the return of investor-purchasers to cities such as Miami is a sign that buyers believe prices have nowhere to go but up after the historic meltdown.
"People are going in with cash because they're confident it's the bottom," Mr. Zalewski said.
It isn't only investors who are paying in cash.
Mr. Molony said first-time buyers and those looking for loans on high-end properties are finding traditional financing tough to get. So they're selling their investments to raise money for a home, or borrowing from family and friends.
Investors accounted for 19 per cent of homes bought in the United States in March, up from 15 per cent in December, and a large percentage of those paid in cash, Mr. Molony said.
But the rest were ordinary home buyers, who are being turned down by lenders, in spite of the extraordinary efforts by the U.S. government to prop up the housing market.
"All-cash purchasing is just standing out," Mr. Molony said. "It's a really high share."
Buying without a mortgage means people are coming up with substantial liquid assets.
The median price of a single-family home in the United States was $164,300 (U.S.) in February; $170,200 for a condo.