More than one-third of the houses purchased in
California in 2012 were all-cash sales, a record for such transactions. DataQuick said today that there were 145,797
condos and houses purchased in the state without benefit of a mortgage, 32.4
percent of all sales. In 2011, which was
also a record year, there were 125,812 such sales or 30.4 percent of the
total. Cash sales have represented an
average of 15.6 percent of sales each year since 1991 when DataQuick began
collecting data. DataQuick attributed the
sales to high investor interest, a difficult mortgage environment, and
perceived higher returns on investments.
"It's clear that a lot of today's housing market recovery is being fueled
by people putting their own money into homes. Some cash buying is part of a
normal housing market, but we're at twice that normal rate. There are always
some rich people, also buyers from abroad, but in a normal market the biggest
single category would be retirees and empty-nesters who are down-sizing. Today,
a lot of buyers are chasing what they view as the deal of a lifetime,"
said John Walsh, DataQuick president.
"I'm sure a lot of today's cash buyers would love to take advantage of the
current low mortgage interest rates, but since the 'loans-gone-wild' days of
2004-2006, the lending pendulum has swung to the opposite end of the spectrum.
Even a lot of well-qualified buyers can't get loans. While the market overall
is improving, sales levels are still below average, and prices much closer to
the bottom than to the peak," he said.
Overall, sales are recovering in California. In 2012 there were 447,573 homes and condos
sold in the state, up from the cyclical low of 383,748 sales in 2007. In 2004 the peak year for home sales in the
State, there were 775,831 sales in 2004.
Current sales are running about 13 percent below the states historic
The median price paid for a California home in 2012 was
$275,000, 10 percent higher than the median of $250,000 in 2011. The annual
median peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009. DataQuick
said about half of this drop can be attributed to shifts in market mix.
Cash buyers paid a median $205,000 last year, up
17.1 percent from $175,000 in 2011. Buyers who financed with a mortgage paid a
median $305,000 in 2012, up 10.5 percent from $276,000 a year earlier,
DataQuick reported. The number of cash
buyers purchasing homes costing more than $500,000 rose 35 percent year-over-year
while cash purchases below $100,000 fell 11.2 percent. DataQuick said some buyers of mid- to high priced
homes used cash either because they couldn't qualify for a loan or wanted to
better their chances of prevailing in bidding situations. It's likely that in
the sub-$100,000 market cash-paying investors simply couldn't find enough homes
for sale in that price range as foreclosures have slowed and many people in lower-cost
areas still owe more than their homes are worth and can't sell.
Fifty-five percent of cash purchases were made by investors
or vacation-home buyers. Multi-home
buyers represented 28 percent of the cash market; 11,700 of those buyers bought
41,500 homes a 19 percent increase in buyers and a 36 percent jump in numbers
of homes they purchased compared to 2011.
Individuals and partnerships bought as many as 1,300 homes but most
brought fewer than five and 65 percent bought two.