In South Florida, 69% of all home sales this summerwere cash, with a statewide rate of 66% according to data fromRealtyTrac.

It doesn't take a Harvard MBA to figure this must impactlenders, who obviously aren't writing loans on these homes. Talk tosome Florida credit unions, and they'll confirm the trend ishitting not only the mortgage department, but members who havesquirreled away down payments as they anticipate buying their firsthome.

The story keeps repeating itself: potential homebuyers findtheir dream home, offer full price, and sometimes within hourslearn the seller has rejected their bid in favor of an even lowerall-cash offer that will speed the closing.

Large retirement communities in Florida such as The Villages andSun City Center have for some time seen as many as 80% of theirhome sales made for cash. It has made sense. Retirees pay off theirhome, sell it and put the money into a house in Florida. They don'twant to go into retirement with a mortgage.

Now cash deals are reaching into the entire market. Doug Leever,mortgage loan manager at $724 million Tropical Financial CreditUnion in Pembroke Pines, Fla., is at ground zero for thistrend.

Has he been seeing a large number of cash sales?

“Absolutely,” he said. “There are a lot of investors in SouthFlorida buying homes for cash. Another factor is the inventory islow. I just had a meeting with some real estate agents and theywere talking about the fact they don't have a lot of listings.”

Some data would suggest Tropical's mortgage business is rollingalong. The credit union closed $22 million in home loans in 2010,$57 million in 2011 and $110 million last year. So far this year,it's ahead of last year's pace.

“The big difference is 35 to 40% of our business now ispurchases, versus last year when it was 15 to 18%,” Leeversaid.

Leever credits the marketing department with raising memberawareness that Tropical Financial offers mortgages.

“When you're competing against cash buyers, I think the bestthing to do is start early. We're just getting marketing underwaythat advises 'Start your home search with Tropical.' We partneredwith CU Realty in October last year and that's helped considerably.The member gets a 20% rebate on the realtor commission and also hasaccess to the Internet listings.”

Tropical is urging members to prequalify, too, he said.

“Normal purchases take anywhere from six months to 18 months toget finalized,” Leever said. “Especially with all the cash offersout there, you have to make a solid offer, you have to rely on anagent who will get the job done for you, and you need a lender whocan get the loan closed quickly.”

Reports indicate many cash buyers are investors looking to rentout the homes until prices rise, then sell them at what they hopewill be a handsome profit. Leever indicated prices are up 25 to 30%in Tropical Financial's main market area of Miami-Dade, Broward andPalm Beach Counties. However, they are still 30 to 40% belowpeak.

Leever said potential buyers remain eager to purchase. A realestate agent told him he listed a condominium for sale on Saturdayand on Monday he had eight offers.

Barbara Moreno, mortgage loan manager at $863 million SouthFlorida Educators Federal Credit Union in Miami, agrees theall-cash wave is drowning the dreams of many buyers.

“It's creating quite a problem for home buyers in certain priceranges,” Moreno said. “It's not just first-time home buyers.Basically it encompasses everybody who is trying to purchase ahouse with financing. People are out-bidding them, or offering thesame with a cash offer.

“It's actually been happening for quite some time, the last yearand a half. People are in a very difficult situation even trying tobuy some of the short sales and foreclosures. They're also gettingeaten up by cash buyers.”

She said real estate agents have told her stories of putting ahouse on the market and selling it the same day. There are very fewhouses in the sought-after $200,000 range.

“It's insanity. It's crazy,” she observed.

Moreno has heard more properties are going to be coming onto themarket, including foreclosures that have been stalled. She said shedoes pre-approvals all day long for people with good credit whohave saved a down payment but can't find a house. Once propertiesbecome available, many of those people are going to have anopportunity to actually buy, she said.

As executive vice president of lending at Fairwinds Credit Unionin Orlando, Jim Adamczyk said he sees disappointed potential buyersevery day.

“The members we deal with are very frustrated,” he said.“Anything that's affordable, $200,000 or less, has multiple offersas soon as it's on the market. The experience is not that great forthe first-time buyer. There was one property that had 20 offers thefirst day. I think some of the first-time buyers are saying, 'Let'sjust rest.'

In addition, he said buyers new to the market and some returningbuyers have additional documentation and compliancerequirements.

“ For the consumer, it's aggravation on both sides,” hesaid.

Next Page: Two Groups of Buyers

Adamczyk said there are two groups of cash buyers: biginstitutional investors who have moved into the market withbillions of dollars and small investors seeking to make moneyrenting out a home.

“As long as the return is good, and money is cheap for theinvestor, they're going to keep buying,” he predicted. “Rates aredefinitely going to impact on how much they buy.”

For the past couple years Adamczyk has seen about half of homesales in the Orlando area close for cash.

“For credit unions, like most lenders out there, the last twoyears have been a refinance market. I think lenders were so busywith refinancing that kind of offset the purchase market. Mostrecently, when rates skewed up, all the refinancing dried up andeverybody's looking for purchasers.”

The Mortgage Bankers Association has been watching the trends.Mike Fratantoni, vice president of research and economics, saidcash has become king in areas of the country struggling with a lotof foreclosures and other distressed properties. Cash sales areappealing because they can be completed more quickly.

However, in some cases that's not the whole story, he said.

“You have an investor group or an institutional buyer who ispaying cash for the property but there might be some financing inthe way the deal is organized,” he said. “Even though thetransaction may look like a cash deal, I'm not sure that meansthere's no debt involved.”

Nationwide, the MBA figures 25% of home sales are cash sales atthis point. Mortgage lending is still not close to what would beexpected in a robust economy. The MBA expects about $620 billion inmortgage originations in 2013. A more typical figure would be $1.2trillion. Next year's pace is projected at $700 billion.

“Particularly in time like now, when we've seen a 70% decline inrefinance, lenders are more interested in ever in doing purchaseloans,” Fratantoni said.

On the bright said, Fratantoni said he anticipates the all-cashpace will slow when there is no longer the prospect of a high levelof investment return and the market resumes what could beconsidered a more normal profile.

“We're almost there in many markets in the country,” he said.“What we're seeing nationally is that as house prices haveincreased more sellers are willing to list their properties. That'sa healthy sign, and I think first-time buyers will begin to seemore inventory.”

His outlook was supported by an Oct. 6 Tampa Bay Timesarticle that reported big investors are putting on the brakes dueto rising prices, skeptical financial backers and fiercecompetition.