In this economy cash is king, and it especially showed in January. A real estate information service indicated this week that the share of California homes purchased with cash rose to a record level in January, with investors and others apparently taking advantage of lower prices and less competition during the market's traditionally slow winter season.
In January, 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 DataQuick Information Systems, whose statistics go back to 1988. January's share of cash sales was up from 28.9 percent of sales in December and 28.5 percent in January 2010. Over the past decade, cash buyers purchased a monthly average of 13.9 percent of the homes sold in California, but since November 2008, the cash level has been above 20 percent.
In January, 51.9 percent of those paying cash were absentee buyers, indicating in most cases the buyers were very likely investors; in vacation markets, a fair number would be second-home purchasers. About 52 percent of the homes purchased with cash had been foreclosed on in the prior 18 months.
The median price paid for a California home purchased with cash was $160,000. The median price for all homes sold statewide in January was $239,000.
"We have been seeing more cash buyers, especially in the lower-cost areas. Investors still see real estate as a good investment," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "In a multiple offer situation, cash is king. Cash buyers will have a stronger negotiating power than other buyers seeking a traditional loan. Cash is certain, it's quick, and there's less chance of a transaction falling through because a buyer's loan was not approved."
In some areas like Riverside, San Bernardino and Sacramento counties, the report states cash buyers purchased more than half of all homes sold. Santa Clara County also saw a record share of sales go to cash buyers in January, as did Contra Costa, Fresno, Orange, Sacramento and Solano counties.
Around the state, the share of cash purchases in the Bay Area was 28.70 percent, a record for the nine-county region. Cash sales accounted for 26.30 percent of all home sales in Santa Clara County in January, up from 22.2 percent in January 2010, hitting the highest level since 1988.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.