Cash-only home sales on the rise

In California, the all-cash offer is king when it comes to luxury property now.   According to the Los Angeles Times, cash deals now account for roughly two-thirds of home sales in Southern California’s most expensive neighborhoods, with all-cash buyers having bought 30.9% of California houses and condos in January.
These current low prices have attracted investors and others in the Inland Empire, with cash offers being accepted left and right in these foreclosure-ridden areas.  But now, cash buyers have moved to luxury property transactions.
Balboa, a community of Newport Beach, saw the highest percentage of cash sales (at 66.7%) last year of any $1-million-plus neighborhoods in the Southland.
The all-cash trend is spreading due to several factors:
  • The difficulty in applying for and getting a large loan from lenders, mainly due to the difficulty appraisers face in valuing luxury property.
  • Reflects speculation by wealthy investors who believe home prices are near the bottom.
  • Housing is thought by many to be a wise financial investment, a place to put some of their money.
  • Foreclosures becoming a significant factor in the market.
  • Investors buying auction sales in order to buy and flip homes.
  • Investors looking for a fast close.

Overall, cash deals accounted for 27.8% of Southern California home sales last year–the most since 1988 according to DataQuick, and double the average of 13% for the last decade.

All of these cash transactions are making it difficult for traditional buyers who must finance their purchases.

All information and data is taken from the Los Angeles Times.  Read the original article by Lauren Beale: “Cash-only home sales rise in California.”
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