Part of the reason is the very large price drops we have seen. Many of the homes are valued at less than half of what they were at the peak. Couple this with extremely low interest rates and an extremely volatile stock market and paying cash looks very inviting.
Likewise, not having to deal with banks tends to make everything much smoother and less unpleasant. Banks require appraisals and the banks essentially own the appraisers. Getting a loan becomes very difficult if the appraisal comes in below the sales price.
“They’re using comparables on distressed homes, which isn’t fair or accurate when you’re looking at a brand new home,” Dillon said. “The appraisal process is so dysfunctional at the moment that it can be tough to get a loan on certain homes.”