The Bling Bubble: Cash buyers outbidding rivals

For a while, home buyers had it good: Nose-diving prices, tax credits for repeat and first-time buyers extended into 2010, incentives from builders and concessions from sellers. But with many markets bottoming out around the U.S., property virgins and pros alike are bumping up against a growing wave of formidable rivals: All-cash buyers.

These bidders are often local investors shopping for starter homes they can rent out or remodel, or just trying to make an easy buck off of a beaten-up foreclosure.

Cash deals are definitely on the rise, according to survey data provided by agents to the National Association of Realtors, which discusses all-cash and other sales trends in its monthly Realtor Confidence Index.

All-cash deals represented about 20 percent of all residential real estate transactions during fourth quarter of 2009, NAR spokesman Walter Molony told HousingWatch. During 2009, all-cash deals represented about 9 percent of the residential market, he notes, versus prior years when they accounted for only 7 percent of the marketplace.