38% of November Home Sales Cash Sales (Oakland, Campbell: real estate, rental market, refinancing)

[Ultrarunner]

I keep reading and hearing Bay Area Real Estate is unaffordable...

Cash accounted for 38% of November Sales... evidently there are still people with money buying.

Cash sales avoid the lender requirements that can turn the process into a nightmare... not just for buyers but also for sellers.

I personally have come to detest the entire lending process... a few years ago my lender offered a simple existing customer refi... wasted months trying to get it done... went to my Credit Union and it was a slam dunk.

Sellers love having a Cash Buyer.

It simplified Negotiations.

Transaction Costs were lower

At recording the property you own it.

No Appraisal anxiety

Paying cash doesn't prevent the owner from later refinancing and this is what I am seeing more... a cash buyer to get into the property that later takes out a First Deed of Trust...

[sonarrat]

Investors. People/entities who make the market more expensive, but don't put any of their money back into the local economy. Screw them.

[Ultrarunner]

I know a few cash buyers... my god sister is one... she started at Apple as a High School summer intern... years later cashed in her stock and paid cash for a modest home in Campbell California...

Some have come into money from varied sources... settlements to inheritance.

What I find fascinating is people with cash willing to go all in on Bay Area Real Estate.

It shows at least anecdotally there are those that still think it to be a wise move and this is not even 10 years after many said Bay Area Real Estate was done to never return...

My little corner of Oakland has simply taken off... can't say how many times it was down for the count... looking back even 4 years ago the prices were half of what they are now.

It also seems to be a strategy to beg and borrow money to make a cash offer... get in and settled and then get a loan to get the money back to the source... stocks, family, etc...

[ambient]

The frequency of cash offers just highlights the extreme concentration of wealth flowing into this area, and it certainly shows how unaffordable the housing environment is for "ordinary" people. Even if you have the 20% to put down on a $1.5M home - and that in itself is certainly not "ordinary" by any American standard - you're still basically uncompetitive.

As for the argument that this is a sign of sustainable real estate price build-up... well, I sincerely doubt that. The tech bubble burst is already starting, and I expect real estate prices will head for the crapper soon...and then it will start all over again. The fact that rich people are putting huge piles of money into accumulating stuff has never been a good sign of anything economically sustainable; just that rich people got rich and now have a lot of buying power. For those who can buy a several $M home in cash, of course, none of this really matters. They likely have plenty more millions to weather any downturn.

[Ultrarunner]

Seems like owning outright would be a big disincentive to liquidate should the market take a downturn.

A lot of people bailed because they owed more than their home was worth last go around...

With fewer people leveraged and many paying down or paying off... I'm betting the next cycle will not be as extreme.

[wasel]

It's not just the Bay Area....there are a lot of cash buyers in ATL, where real estate is nowhere near as high as it is there. My friends who were shopping last year started to get desperate because every house they put an offer on had a cash buyer swooping in and taking it. Personally I can't see having that much cash to put into a purchase all at once unless I had an inheritance or something.

[Ultrarunner]

Real Estate has always been a series of peaks and valleys...

Does seem to always ratchet up after a downturn... at least on the West Coast.

Time will tell if those buying now will regret or not.

I had been seriously looking in 2012 and was not able to make it happen... with that in mind I'm again on the sidelines...

My brothers both bought around that time and have seen some real gains.

What I see a lot of is people that embraced renting and were really OK not owning or had sworn off owning and now majorly depressed because homes are up and so are rents...

[MajorDMP]

Thank the Federal Reserve/Wall Street for destroying the economy and the market. Trillions of hedge fund dollars looking for anything that can yield a return or simply a place to park large amounts of cash. Ordinary folks are priced out. We cant stop the madness until the head of the beast is killed.

[Malloric]

I wouldn't read anything of the kind into it. Cash sales nationally are around 36% so it's only slightly above the national average. Cash sales in 2006 were around 26% or so. The dropping percentage of cash sales just means it's a combination of easier to get approved and less institutional (not necessarily large) investors buying SFHs. I mean, I'd have loved to buy in the 2008-'11 period but actually getting approval for any kind of loan then was very difficult.

I got stuck in the rental market. I wouldn't say it's something that really depresses me but, yeah, I'd rather have bought.

[Hemlock140]

It seems odd that the same percentage applies to Seattle:

http://www.bizjournals.com/seattle/b...8-percent.html