Cash-only home sales rise in California
Los Angeles Times
Lauren Beale
Cash talks. And it's speaking loudly in California real estate these days, even in the nicest parts of town.
All-cash buyers grabbed a record 30.9% share of the Golden State's houses and condos in January as low prices lured investors and others, according to San Diego research firm DataQuick Information Systems.
...The shift toward cash purchases started when foreclosures became a significant factor in the market, said Gary Painter, director of research at the USC Lusk Center for Real Estate. That's because investors buying properties on the courthouse steps don't go looking for mortgages.
"There have always been all-cash investors who think they can go in and flip a home," he said.
There's just more of them now. Cash buying has reached fever pitch in parts of Orange County, where the Balboa community of Newport Beach saw the highest percentage of sales going to cash buyers last year of any $1-million-plus Southland community -- 66.7%.
...While investors are counting on home prices to rise, they should also be prepared for a long wait, USC's Painter cautioned.
"My sense is that we are in a flat period," he said. "I expect we'll be there for another 12 months as the inventory gets pushed out in the foreclosures that banks are holding and as they dispose of them."
The growth in cash buying is making clinching a deal increasingly difficult for traditional buyers.
"There is a competitive advantage against people who have to finance," Painter said. With a cash buyer, the seller knows that the chances of a successful close are higher. "It gives people a leg up on the buying side."
It also translates into dollars. The all-cash buyer often can negotiate about 10% off the asking price, real estate experts agree.