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.
| 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% |