Buyers who need a mortgage can't go above the appraisal value, which in times of high demand lags behind the actual value of the home. If the buyer and seller reach an agreed upon value and the appraisal comes in lower than they expect, the buyer may have to back out (which can screw up the seller's plans) or lower the offer.
A cash offer doesn't have that risk, so all else being equal sellers will choose them over mortgage offers. This has the effect of raising prices faster than they might otherwise go, because the appraisal system normally serves as a bit of inertia in the system.
Yes, that's what we did, but that's out of reach for most first-time local buyers, who typically barely have enough for the down payment on the mortgage. An influx of out-of-state buyers who have lots of equity in their to use will therefore price out the locals.
A cash offer doesn't have that risk, so all else being equal sellers will choose them over mortgage offers. This has the effect of raising prices faster than they might otherwise go, because the appraisal system normally serves as a bit of inertia in the system.
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