Wednesday, February 06, 2013

California Housing Report: Record Cash Buying in 2012

by Bill McBride on 2/06/2013 03:52:00 PM

From DataQuick: Record Number of California Homes Bought with Cash

The number of California homes purchased with cash reached an all-time high last year ... A total of 145,797 condos and houses were bought without mortgage financing in 2012, a record. That was up from 125,812 in 2011, the previous high. In 2007, as the housing market deflated, cash sales totaled 39,731, according to San Diego-based DataQuick.

"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.

Cash purchases accounted for a record 32.4 percent of California's overall home sales last year, up from 30.4 percent in 2011 and more than double the annual average of 15.6 percent since 1991, when DataQuick's cash statistics begin.
...
Last year more all-cash deals occurred above the $500,000 threshold, and fewer below $100,000. Cash-only purchases of $500,000 or more rose 35.0 percent compared with 2011. That compares with an 11.2 percent decline in the number of homes cash buyers purchased below $100,000.

Investors and vacation-home buyers bought roughly 55 percent of all homes purchased with cash last year. Multi-home buyers, meaning those purchasing two or more properties, accounted for about 28 percent of last year's cash sales, up from around 24 percent in 2011, according to an analysis of buyer names in the public record.

Last year more than 11,700 cash-paying, multi-home buyers collectively purchased about 41,450 homes.
emphasis added
Cash buying at the low end is mostly investors, but there are a large number of cash buyers for higher priced homes.

DataQuick reports that a total of "447,573 homes were sold in California to all buyers".  If we assume that last sentence is institutional investors - then institutional investors are buying close to 10% of all homes in California.

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