Cash is king, especially when it comes to deep-pocketed investors looking to snatch lower-priced homes, including short sale properties.
Almost one of every three homes were bought with cash in 2012, a record for all-cash deals – and more than double the annual average, according to DataQuick.
The state had a record 145,797 cash deals last year, compared to 125,812 cash purchases in 2011. In 2007, the state had 39,731 cash purchases, DataQuick reported.
“It’s clear that a lot of today’s housing market recovery is being fueled by people putting their own money into homes,” says John Walsh, president of DataQuick. “Some cash buying is part of a normal housing market, but we’re at twice that normal rate. There are always some rich people, also buyers from abroad, but in a normal market the biggest single category would be retirees and empty-nesters who are downsizing. Today, a lot of buyers are chasing what they view as the deal of a lifetime.”
Cash deals accounted for 32.4% of home sales in 2012, compared to 30.4% in 2011 – and more than double the annual average of 15.6% since 1991, according to DataQuick.
Cash buyers paid a median of $205,000 last year, compared to $305,000 for those who financed their purchases. The state’s median-home price, whether financed or bought with cash, was $275,000.
Cash deals are more common as homebuyers face much-tougher mortgage requirements.
“Even a lot of well-qualified buyers can’t get loans,” Walsh says. “While the market overall is improving, sales levels are still below average and prices much closer to the bottom than to the peak.”
Southern California – paced by the 24,688 homes in Los Angeles County – had the highest percentage of cash deals last year at 20.2%, followed closely by the Central Coast at 20.1%. Cash deals accounted for 17.7% of Bay Area home sales in 2012.