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27% of Huntington Beach Homes Bought with Cash

Source:  Realtor MLS & Dataquick

The number of Huntington Beach homes bought with all cash has been increasing.  In the last 12 months (February 1, 2012 to January 31, 2013) there were 427 house and condos bought with all cash according to the Realtor MLS.  This represents 26.6% of all homes and condos sold in Huntington Beach during this period.  The highest price paid for a Huntington Beach home “all cash” during this period was $2,750,000, and the average was $512,591.

During the same period last year (2012) the number was 302, in 2011 the number was 260, in 2010 it was 226.  So the number of homes bought with all cash in Huntington Beach has nearly doubled in the last three years.

In Orange County, there were 10,760 homes and condos bought with all cash in 2012… a 28% increase over 2011.

The number of California homes purchased with cash reached an all-time high last year, the result of high investor interest, a difficult mortgage environment, and perceived higher returns on investment, a real estate information service reported.

Homes Sold All Cash California ChartA 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.

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 a total of 447,573 homes were sold in California to all buyers, whether they used a loan or cash. While up from the cyclical low of 383,748 sales in 2007, last year’s total was well below the peak of 775,831 sales in 2004, and it was about 13 percent below the state’s average annual home sales since 1988.

The median price paid for a California home, whether financed or bought with cash, was $275,000 in 2012, up 10.0 percent from $250,000 in 2011. The annual median peaked at $469,500 in 2006, and bottomed out at $245,000 in 2009. Around half of the median’s peak-to-trough 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.

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.

Some buyers in the mid- to high-priced markets 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. Inventory in affordable neighborhoods has generally been low because foreclosures have slowed, meaning less supply, and many people in these areas still owe more than their homes are worth, hence they can’t sell.

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. Compared with 2011, that marked a nearly 19 percent increase in the number of multi-home buyers and a roughly 36 percent jump in the number of homes they bought. In 2012, individual investors or partnerships paying cash bought as many as 1,300 homes, although the vast majority (88 percent) of these multi-home cash buyers bought fewer than five, and 65 percent bought two.

For questions about buying and selling real estate in Huntington Beach and Coastal Orange County, contact Anna Child.

Anna Child is an expert in the Huntington Beach market area