Record One-third of Home Sales in California were All-Cash

More than one-third of the houses purchased inrnCalifornia in 2012 were all-cash sales, a record for such transactions.  DataQuick said today that there were 145,797rncondos and houses purchased in the state without benefit of a mortgage, 32.4rnpercent of all sales.  In 2011, which wasrnalso a record year, there were 125,812 such sales or 30.4 percent of therntotal.  Cash sales have represented anrnaverage of 15.6 percent of sales each year since 1991 when DataQuick beganrncollecting data.  DataQuick attributed thernsales to high investor interest, a difficult mortgage environment, andrnperceived higher returns on investments. </p

“It’s clear that a lot of today’s housing market recovery is being fueledrnby people putting their own money into homes. Some cash buying is part of arnnormal housing market, but we’re at twice that normal rate. There are alwaysrnsome rich people, also buyers from abroad, but in a normal market the biggestrnsingle category would be retirees and empty-nesters who are down-sizing. Today,rna lot of buyers are chasing what they view as the deal of a lifetime,”rnsaid John Walsh, DataQuick president.</p

“I’m sure a lot of today’s cash buyers would love to take advantage of therncurrent low mortgage interest rates, but since the ‘loans-gone-wild’ days ofrn2004-2006, the lending pendulum has swung to the opposite end of the spectrum.rnEven a lot of well-qualified buyers can’t get loans. While the market overallrnis improving, sales levels are still below average, and prices much closer tornthe bottom than to the peak,” he said.</p

Overall, sales are recovering in California.  In 2012 there were 447,573 homes and condosrnsold in the state, up from the cyclical low of 383,748 sales in 2007.  In 2004 the peak year for home sales in thernState, there were 775,831 sales in 2004. rnCurrent sales are running about 13 percent below the states historicrnaverage.</p

The median price paid for a California home in 2012 wasrn$275,000, 10 percent higher than the median of $250,000 in 2011. The annualrnmedian peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009. DataQuickrnsaid about half of this drop can be attributed to shifts in market mix.</p

Cash buyers paid a median $205,000 last year, uprn17.1 percent from $175,000 in 2011. Buyers who financed with a mortgage paid arnmedian $305,000 in 2012, up 10.5 percent from $276,000 a year earlier,rnDataQuick reported.  The number of cashrnbuyers purchasing homes costing more than $500,000 rose 35 percent year-over-yearrnwhile cash purchases below $100,000 fell 11.2 percent.  DataQuick said some buyers of mid- to high pricedrnhomes used cash either because they couldn’t qualify for a loan or wanted tornbetter their chances of prevailing in bidding situations. It’s likely that inrnthe sub-$100,000 market cash-paying investors simply couldn’t find enough homesrnfor sale in that price range as foreclosures have slowed and many people in lower-costrnareas still owe more than their homes are worth and can’t sell.</p

Fifty-five percent of cash purchases were made by investorsrnor vacation-home buyers.   Multi-homernbuyers represented 28 percent of the cash market; 11,700 of those buyers boughtrn41,500 homes a 19 percent increase in buyers and a 36 percent jump in numbersrnof homes they purchased compared to 2011. rnIndividuals and partnerships bought as many as 1,300 homes but mostrnbrought fewer than five and 65 percent bought two.

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