Wikinvest Wire

Cash is king?

Monday, November 30, 2009

After having spent the better part of the last week in California where credit cards seem to be used for nearly every purchase - from grande lattes at Starbucks to candy bars and giant sodas at the AM/PM - it comes as a surprise to me to hear that a growing number of shoppers are paying cash for their holiday purchases as reported by Reuters.

Cash was king for consumers who shopped over the Thanksgiving weekend, according to survey results released on Sunday, and that factor could have cost retailers additional sales.

Only 26 percent of people who shopped over the weekend said they used credit cards for their purchases, according to a poll conducted for Reuters by America's Research Group.

"That's an amazing shift in consumers' habits," said Britt Beemer, founder of America's Research Group.

A total of 39 percent said they used cash, while the remaining shoppers used debit cards, the survey showed.

Consumers shunning credit cards is a bad sign for retailers, since people who buy gifts with a credit card tend to spend anywhere from 20 to 40 percent more on the gift, Beemer said.
Also on our trip south, while on the I-5 just north of Sacramento - one of the many housing bubble hotspots in recent years - we spotted a sign that probably characterizes today's housing market better than anything I've seen recently:

New Homes for Sale!
Zero Down! Government Program!

We also heard stories of aspiring homeowners losing bidding wars to those making much lower offers but paying cash for foreclosed properties in the $120K to $180K range, what appears to be the sweet spot for the real estate market today. In this case, cash really is king.

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Anonymous said...

Sweet spot, exactly so. People want affordable homes, not debt slavery for life just because zoning boards want more property taxes. $120k for a home is much more reasonable. There is also plenty of demand for sub $100k homes, but the central planners won't let them be built.


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