Home > Uncategorized > Record Portion of California Homes Bought With Cash

Record Portion of California Homes Bought With Cash

February 28, 2011

The share of Golden State homes purchased with cash rose to a record level last month as investors and others took advantage of lower prices and less competition during the market’s winter doldrums, a real estate information services reported.

Last month 30.9 percent of all new and resale houses and condos sold statewide were bought without a mortgage – the highest level in at least 23 years, according to San Diego-based DataQuick Information Systems, whose statistics go back to 1988. Last month’s cash figure was up from 28.9 percent of sales in December and 28.5 percent a year earlier.

January’s high point follows a record year for cash deals in California. Last year cash buyers purchased 27.8 percent of all homes sold, up from 26.0 percent in 2009, which was the prior annual peak.

The trend extends well beyond California. For last month and for all of last year, the portion of homes bought with cash climbed to peak levels in DataQuick’s statistics across much of the West, including the Phoenix, Las Vegas, Reno, Denver, Portland and Seattle regions.

The all-cash deals were transactions where there was no indication in the public record of a purchase mortgage recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage. Also, in some cases cash buyers might be taking out mortgages after their purchases.

Over the past decade, cash buyers purchased a monthly average of 13.9 percent of the homes sold in California, though since November 2008 the cash level has been above 20 percent.

For the past couple of years all-cash deals have become far more common in lower-cost markets where prices have dropped sharply, luring investors and other buyers who either can’t qualify for a traditional mortgage, or who simply view housing as a relatively attractive place to park their money. Moreover, using cash can get you to the head of the line if there are multiple offers on a property, given sellers favor the relative speed and certainty of all-cash transactions.

Last month 51.9 percent of those paying cash were absentee buyers, meaning their property tax bills will be sent to a different address. In most cases this indicates the buyer is an investor, though in vacation markets a fair number would be second-home purchasers. Of the cash buyers who appear to be owner occupants, it can’t be determined from public records what percentage bought for purely investment reasons, perhaps with a plan to sell after prices start rising again.

Foreclosures are a big target for cash buyers, but not the only target. About 52 percent of the homes purchased with cash in January had been foreclosed on in the prior 18 months.

The median price paid for a Golden State home purchased with cash last month was $160,000, down from $175,000 in December and $164,000 a year earlier. That compares with a median of $239,000 last month for all homes sold statewide.

The median-size of a California home purchased with cash last month was 1,344 square feet, with 3 bedrooms and 2 bathrooms. The median size of resale single-family detached houses bought with cash was 1,443 square feet, while for resale condos it was 1,050 square feet.

Last month resale houses made up 75.3 percent of the cash sales, while resale condos were 22.2 percent and all newly built homes just 2.5 percent.

The median age of existing single-family houses bought with cash last month was 41 years, while it was 29 years for existing condos.

Of the 247 California zip codes that logged at least 10 cash sales last month, 60 saw cash buyers purchase more than half of all homes sold. Of those 60 zip codes, 25 were in Riverside, San Bernardino and Sacramento counties.

Some of the larger counties that saw a record share of sales go to cash buyers last month were Contra Costa, Fresno, Orange, Sacramento, Santa Clara and Solano counties. Although most of the state’s 58 counties did not see a record level of homes purchased with cash last month, enough of the larger ones saw a record or a near-record level to pull the entire state up to its highest point for any month since at least 1988. (Many of the state’s large counties did see a record portion of homes bought with cash in all of 2010, compared with all other years back to 1988).

Percentage of homes sold to buyers paying cash

County/Region Jan-10 Jan-11 Peak month since 1988 10-yr monthly avg
Los Angeles 26.30% 24.60% 26.40% 10.60%
Orange 24.20% 27.40% 27.40% 11.30%
Riverside 36.30% 35.80% 37.40% 16.70%
San Bernardino 36.10% 38.60% 38.80% 15.90%
San Diego 28.00% 28.00% 29.10% 12.60%
Ventura 22.70% 21.30% 43.00% 11.00%
SoCal 29.60% 29.50% 30.10% 12.90%
Alameda 25.40% 25.50% 28.10% 10.40%
Contra Costa 29.60% 32.00% 32.00% 12.60%
Marin 26.10% 29.90% 32.20% 15.80%
Napa 32.20% 31.90% 33.70% 13.30%
Santa Clara 22.20% 26.30% 26.30% 12.50%
San Francisco 25.40% 21.90% 25.60% 13.10%
San Mateo 24.50% 25.40% 25.50% 10.70%
Solano 27.90% 35.90% 35.90% 13.30%
Sonoma 27.50% 28.30% 34.60% 14.80%
Bay Area 26.00% 28.70% 28.70% 12.40%
El Dorado 19.40% 34.80% 37.70% 18.00%
Fresno 31.10% 35.00% 35.00% 15.90%
Kern 28.50% 35.80% 36.50% 16.90%
Madera 33.60% 48.60% 48.60% 22.90%
Merced 46.70% 46.50% 48.00% 20.70%
Monterey 30.40% 31.50% 36.20% 13.70%
Nevada 37.20% 28.20% 37.70% 23.10%
Placer 30.50% 28.50% 32.60% 17.70%
Sacramento 31.80% 37.50% 37.50% 13.90%
Shasta 36.90% 37.30% 37.30% 21.40%
San Joaquin 32.50% 34.10% 36.10% 13.70%
San Luis Obispo 25.70% 27.50% 34.30% 18.10%
Santa Barbara 25.00% 33.90% 33.90% 14.70%
Stanislaus 31.70% 37.10% 37.10% 14.60%
Sutter 23.60% 34.20% 36.80% 15.20%
Santa Cruz 26.50% 31.90% 35.70% 13.80%
Tuolumne 37.00% 39.50% 46.70% 25.40%
Tulare 27.70% 31.60% 32.40% 16.70%
Ventura 22.70% 21.30% 43.00% 11.00%
Yolo 19.50% 22.40% 31.90% 11.70%
Yuba 20.30% 22.70% 33.70% 14.60%
California 29.50% 30.90% 30.90% 13.90%

Thank You  DataQuick
Dave & David Warner

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  1. March 1, 2011 at 3:33 PM

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