The number of California homes purchased with cash reached a record high in 2012, according to DataQuick, a real estate information service report.
The report indicates that a total of 145,797 condominiums and houses were bought with cash in the state last year, up from 125,812 in 2011. This is in marked contrast to 2007, when cash sales totaled just 39,731. Cash purchases accounted for 32.4 percent of the state’s overall home sales last year, an increase of 30.4 percent from 2011.
Realtors attribute the rise in cash sales to stricter lending standards, low inventory and interested investors.
Cash buyers made up one-third of her business last year, said Silicon Valley Association of Realtors President Carolyn Miller. She noted that some buyers paying cash are from abroad, while others either saved or inherited money and preferred to pay cash.
“With the very low inventory we are having, many see cash as giving them an edge, especially when it comes to a multiple-offer situation,” Miller said. “Investors are also keen on purchasing property because home prices are still reasonable today compared to when they were at their peak, so they are guaranteed an excellent rate of return.”
The median price paid for a California home was $275,000 in 2012, up 10 percent from $250,000 in 2011. The median peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009, according to DataQuick.
In the Bay Area, the number of homes purchased with cash increased 17.7 percent in 2012 from the prior year. Marin County had the largest increase in cash purchases at 54.1 percent, followed by the counties of Napa (38.4 percent), San Francisco (32.4 percent), Sonoma (24 percent), Alameda (17.6 percent), Santa Clara (17.1 percent), San Mateo (15 percent), Solano (10.7 percent) and Contra Costa (9.9 percent).
Miller said there is concern that the current market situation is squeezing out first-time homebuyers.
“My buyers have been shut out because they are obtaining mortgages,” she said. “These are families that want to buy a home – the house, the neighborhood, join in with neighbors and live there to have and nurture their children, to live the American dream. Cash buyers typically purchase property for investment (and) families to put down long-term roots.”