Who needs a mortgage when you have greenbacks to spare?
Not the wealthy, and certainly not investors, both of whom appear to be saturating Californiaâ€™s real estate market these days. The latest sign: Cash purchases of homes in the Golden State hit a record last year, accounting for 32.4% of all home sales.
â€œItâ€™s clear that a lot of todayâ€™s housing market recovery is being fueled by people putting their own money into homes,â€ John Walsh, president of real estate firm DataQuick, said in a news release detailing the new data. â€œSome cash buying is part of a normal housing market, but weâ€™re at twice that normal rate.â€
And those buyers appear to be driving up prices. The median home price for cash purchases last year was $205,000, a 17.1% increase from the year before. That means that cash buyers are either paying more for homes or increasingly purchasing pricier properties.
Ed Kaminsky, a real estate agent with Shorewood Realtors in Manhattan Beach,Â recently told The TimesÂ that he has done more cash deals in the last two years or so than during the first 24 years of his career. A good chunk of those buyers are young and wealthy shoppers who are either the recipients of trust funds or are getting help from their parents, he said.
Those parents, and young buyers, are motivated to buy as prices have sunk and real estate has reemerged as a secure investment, he said.
â€œPeople feel that cash is safe in real estate and maybe not safe in the stock market or even sitting in a bank,â€ Kaminsky said.
The 32.4% of purchases that were all-cash last year was up from 30.4% in 2011, and is more than double the annual average of 15.6%, DataQuick said. A total of 145,797 condominiums and houses were bought without a mortgage last year. Compare that to 39,731 in 2007 when the market crashed.