I think a lot of them are from Taiwan and China. They have lots of cash, they don’t like to borrow money (in general), and education is all-important to them. So they’re going to find what they think is the best school district and buy a house there with cash. They communicate with each other, and once an area gets a good reputation, word spreads. It’s happened in the Bay area, L.A., and San Diego (and no doubt other metropolises as well). A particular area gets the reputation. In San Diego, it’s Carmel Valley.

Not sure what percentage of the cash buyers are Chinese, but I know that it’s common for them to pay cash.

[img_assist|nid=17338|title=Chinese RMB to US dollar|desc=|link=node|align=left|width=466|height=304]

since 2005 the Chinese RMB has appreciated against the US dollar by 25%. which means a house in CV is now at a 25% discount compared to 2005.

A $1 million dollar home in CV is now just $750k for them.

[quote=The-Shoveler]
But really I think it is more borrowing retirement and investment accounts (and parents) then taking a mortgage after close than anything else.[/quote]

I fail to understand this. won’t it be better for them to take a mortgage before buying the property rather than after? Can you elaborate on possible motivations to do such a thing?

[quote=zk]I think a lot of them are from Taiwan and China. They have lots of cash, they don’t like to borrow money (in general), and education is all-important to them. So they’re going to find what they think is the best school district and buy a house there with cash. They communicate with each other, and once an area gets a good reputation, word spreads. It’s happened in the Bay area, L.A., and San Diego (and no doubt other metropolises as well). A particular area gets the reputation. In San Diego, it’s Carmel Valley.

Not sure what percentage of the cash buyers are Chinese, but I know that it’s common for them to pay cash.[/quote]

Same thing happens in New Jersey, near Fushing, NY, Irvine, and hacienda height in LA.

Koreans too.

My thoughts are that you should not get rattled. Even by your own research, you found that around 70% of the people in CV have mortgages. That means when you make your inquiries or write your offers, that you should see that same proportion, 3 out of 10 have cash buyers yet you are implying that this is not the case.

My rule of thumb to clients is don’t get rattled by what you are told. You cannot control the external environment. Set your strategy and pursue the home in a manner determined by how aggressive you want to be, not by what you may get told based on simple inquiries. While the market is still hot, it is not quite as hot as it was in March. There have been more homes coming on the market and of course, pricing has jumped but we are approaching the price equilibrium that happens after a major leg up.

If I looked at the past 30 closings in CV for detached homes I would be willing to bet that no more then 20% are cash. I could be wrong, but would be very surprised. The profile of the cash buyer is a trivial detail, I guess people are curious so that is why they bring it up?

Your sense about properties coming back to the market does match what I have seen. Many homes are not appraising because the leg up was so steep that there are not enough comps to justify the rates. Originating lender guidelines are forcing appraisers to find hard comps and if that cannot be done the appraisal will not come in. Some buyers will pay the difference and some will not. Stay the path and you will do okay.

[quote=FlyerInHi][quote=freshman]They have to pay cash because they cannot get a loan here as they don’t have business or job here . Also a rumor is the new “no corruption” policy came in from the new china president took the seat. They are afraid their money from laundry will be taken away, so they move their money out from china , buy whatever in other countries to save their properties oversea.[/quote]

I spent a lot of time talking to these people when they travel.

These guys are not corrupt politicians but businessmen and traders who speak English already and have been involved in international trade.

They earned their money fair and square. Maybe they didn’t pay much income taxes in their home countries, but that a different story. It’s not unusual for a small business to net $200k per year. Asians are thrifty and usually own houses paid off already (from their parents). So after a decade in business, they can easily buy a house all cash.

Same thing for people from Latin America, South Africa, etc. we live in a globalized world.[/quote]

I would add when you look around the world, at first and second world countries (and some third),

The U.S.A. is in the RE Fire sale bargain ben (not as much as we were two years ago but still a relative bargain).
Try buying a Condo in shanghai.

[quote=FlyerInHi]
Interest rates are low so parking money in real estate, especially If it’s something you can use is not a bad deal at all.[/quote]

Flyer, I’m not sure I follow the connection between interest rates and buying a home all cash. could you please elaborate?