Cash Buyers

[sdrealtor]

Starting a thread so I dont forget. Still have not gotten a Zip code selection from DZ

For now its gonna be

92009
92130
92122

Im gonna throw in a more urban one like North Park. Will also try try to do some digging into 92037

It is gonna take some time but general plan is to identify what % of sales are cash (attached and detached) and what do those cash buyers look like (investor vs owner occ).

Am I missing anything?

[Anonymous]

I would be more interested in knowing what % of cash buyers are living in the house as their primary residence. Probably can’t know that for sure from available data. But I would assume that most cash buyers are NOT purchasing a primary residence with all cash. I’m not saying it doesn’t happen, but doesn’t really make sense with mortgage rates so low in recent years.

Point is Nationally, a lot of RE purchases have been investors either buying rental properties or 2nd, 3rd vacation homes etc. As interest rates go up, and RE prices start to collapse, I expect the demand for these purchases to dry up, and eventually many of these investors will have to jettison their extra properties if values drop too low (while their Stock portfolios are also dropping and triggering margin calls).

[sdrealtor]

If the tax records indicate a mailing address different than the physical address it’s not a primary residence. There are a few other ways but i think i can answer whether it’s owner occupied with well over 90% confidence level

Second homes are not investment purchases. They are for enjoying

Do you have a zip code to add?

[XBoxBoy]

[quote=deadzone]I would be more interested in knowing what % of cash buyers are living in the house as their primary residence. Probably can’t know that for sure from available data. But I would assume that most cash buyers are NOT purchasing a primary residence with all cash. I’m not saying it doesn’t happen, but doesn’t really make sense with mortgage rates so low in recent years. [/quote]

I would disagree, and I’ll use myself as an example. For a number of years my wife and I have been looking for a bigger house. We have been steadily saving money and due to stock market gains have amassed more than we would have thought possible. In early January a house we really liked came on the market in La Jolla. It was virtually all the things we had been looking for. When the house went on the market, the listing agent told everyone that cash offers would be preferred. So we made a full price cash offer, with an escalator clause. (30 day escrow) There were several competing offers and for reason I won’t get into here, while not the top price (but close) we were selected as the purchasers provided we would switch to a 15 day escrow. So, we agreed. Before January was out, we’d sold a shocking amount of stock and paid a ton of money for our dream house.

But, despite this being our dream house, that’s not to say it didn’t need some work and updates. So… we are in the process of getting plans for the remodel we will do, and it will easily be a year before we move in. So, looking at tax records, you will see that our primary address is the house we are currently living in, but will probably sell in a year or so when we move to the new house.

All of this is a simple example of how people buying houses for their primary residence with all cash exist out here. We aren’t investors, despite owning two houses, nor are we that unusual. I’ve know several other people in the area who have done the exact same thing we are doing.

[Anonymous]

[quote=sdrealtor]If the tax records indicate a mailing address different than the physical address it’s not a primary residence. There are a few other ways but i think i can answer whether it’s owner occupied with well over 90% confidence level

Second homes are not investment purchases. They are for enjoying

Do you have a zip code to add?[/quote]

Okay, just curious if that is possible to tell how many cash offers are primary. I don’t care about any particular zip, just in general. I understand that 2nd and 3rd home are not necessarily investment properties, but many times if not most times they are. And either way, those homes will be the quickest to be jettisoned in an economic downturn. Also I understand that there are cases where people pay cash for primary, definitely that is more common recently due to the fact that regular people are having to compete with investors and foreign money interests who are paying cash.

In a normal RE market, which we most definitely have not been in for recent years, I expect people paying cash for primary residence was pretty rare.

[pinkflamingo]

Nice! I’m curious as well. What I found so far.

Startups that let you do this. Flyhomes and ribbon. General idea is you pay a little more and they get you a “cash offer”. Not 100% sure how they work.

Not really using cash in a cash offer. From reddit, “They’re providing proof of funds via assets they don’t actually plan to liquidate to purchase the home. EX: I put in a cash offer, proof of funds via my 401k. I am getting a mortgage” I’ve heard OpenDoor has a “cash backed” offer.

Loan against assets.
I’ve heard of people getting loans against their 401k and/or stock portfolios. Is this a new thing? Is it via margin loan or is there a new financial vehicle. I would like to know more about this and what happens if the portfolio falls.

[Coronita]

[quote=sdrealtor]If the tax records indicate a mailing address different than the physical address it’s not a primary residence. There are a few other ways but i think i can answer whether it’s owner occupied with well over 90% confidence level

Second homes are not investment purchases. They are for enjoying

Do you have a zip code to add?[/quote]

Generally speaking,yes. But for me, all my property tax bills go to a PO Box, because otherwise I get hit with solicitations at my home address by companies and people dumpster diving in the county public records that list the property and mailing address of the tax bill.

Two ways to determine if a house is primary residence are:

1. look at the property tax bill and see if there’s a primary residence homeowner’s exemption on it.

2. if the property is inside the city of san diego jurisdiction, see if the address has an rental business tax on it.

Example that I randomly pulled in LJ.,..
[img_assist|nid=27674|title=ptax2|desc=|link=node|align=left|width=540|height=308]

Homeowner’s exception $0 => not owner occupied.

[Anonymous]

[quote=pinkflamingo]Nice! I’m curious as well. What I found so far.

Startups that let you do this. Flyhomes and ribbon. General idea is you pay a little more and they get you a “cash offer”. Not 100% sure how they work.

Not really using cash in a cash offer. From reddit, “They’re providing proof of funds via assets they don’t actually plan to liquidate to purchase the home. EX: I put in a cash offer, proof of funds via my 401k. I am getting a mortgage” I’ve heard OpenDoor has a “cash backed” offer.

Loan against assets.
I’ve heard of people getting loans against their 401k and/or stock portfolios. Is this a new thing? Is it via margin loan or is there a new financial vehicle. I would like to know more about this and what happens if the portfolio falls.[/quote]

I’ve heard about these techniques (tricks) too. If this is common, what’s going to happen if we have a 30-40% crash in stock market, to all of the folks who secured these real estate loans using their 401K, brokerage account or corporate stock options as collateral? When that margin call hits, will they be kicked out of their house like a bank Repo?

[sdrealtor]

[quote=XBoxBoy][quote=deadzone]I would be more interested in knowing what % of cash buyers are living in the house as their primary residence. Probably can’t know that for sure from available data. But I would assume that most cash buyers are NOT purchasing a primary residence with all cash. I’m not saying it doesn’t happen, but doesn’t really make sense with mortgage rates so low in recent years. [/quote]

I would disagree, and I’ll use myself as an example. For a number of years my wife and I have been looking for a bigger house. We have been steadily saving money and due to stock market gains have amassed more than we would have thought possible. In early January a house we really liked came on the market in La Jolla. It was virtually all the things we had been looking for. When the house went on the market, the listing agent told everyone that cash offers would be preferred. So we made a full price cash offer, with an escalator clause. (30 day escrow) There were several competing offers and for reason I won’t get into here, while not the top price (but close) we were selected as the purchasers provided we would switch to a 15 day escrow. So, we agreed. Before January was out, we’d sold a shocking amount of stock and paid a ton of money for our dream house.

But, despite this being our dream house, that’s not to say it didn’t need some work and updates. So… we are in the process of getting plans for the remodel we will do, and it will easily be a year before we move in. So, looking at tax records, you will see that our primary address is the house we are currently living in, but will probably sell in a year or so when we move to the new house.

All of this is a simple example of how people buying houses for their primary residence with all cash exist out here. We aren’t investors, despite owning two houses, nor are we that unusual. I’ve know several other people in the area who have done the exact same thing we are doing.[/quote]

I would have figured that out. Someone buying a $1M plus home for cash in the area they live fro a long time and own another is not likely an investor. Thats not the profile of someone buying a house to rent or flip.

[sdrealtor]

Ok here’s the first one.

92009 Attached.
52 sales of which 8 are cash. From least expensive to most expensive

Long time local owns no other investment properties. Have lived long enough this could be for young adult kid but Id lean toward investment

Vacation/Retirement Home- older executive from southern state bought nice turnkey condo with view. Very likely investment

LLC- definitely investor

Local investor

Retirement age couple live inland in same house for 25+ years. No other properties besides current home. Either bought for retirement income or for downsize move closer to beach area which is common here. Coin toss

Definitely primary

Definitely primary

Recent retiree of local public company. This is definitely a retirement/vacation home. Its around corner from former company, a price that would not pencil in any way and a guy that could easily retire with 1 to 3 others easily to split time.

It looks like the investment properties skew heavily to the low end

Out of 8 cash sales we have
2 primaries
2 second homes
2 investors
2 unknown could be investor/for family member or future retirement home

[sdrealtor]

[quote=deadzone][quote=pinkflamingo]Nice! I’m curious as well. What I found so far.

Startups that let you do this. Flyhomes and ribbon. General idea is you pay a little more and they get you a “cash offer”. Not 100% sure how they work.

Not really using cash in a cash offer. From reddit, “They’re providing proof of funds via assets they don’t actually plan to liquidate to purchase the home. EX: I put in a cash offer, proof of funds via my 401k. I am getting a mortgage” I’ve heard OpenDoor has a “cash backed” offer.

Loan against assets.
I’ve heard of people getting loans against their 401k and/or stock portfolios. Is this a new thing? Is it via margin loan or is there a new financial vehicle. I would like to know more about this and what happens if the portfolio falls.[/quote]

I’ve heard about these techniques (tricks) too. If this is common, what’s going to happen if we have a 30-40% crash in stock market, to all of the folks who secured these real estate loans using their 401K, brokerage account or corporate stock options as collateral? When that margin call hits, will they be kicked out of their house like a bank Repo?[/quote]

Not common and certainly not common here. Not even a chance

[sdrealtor]

Typo above. Out of state buyer not investor

And the second one. Forgot to add the time period is April/May closed sales for all

92009 Detached
61 sales of which 11 are all cash. These will be much easier

10 are primary residences. The last and most expensive is owned by someone that owns at 3 others locally. This is the nicest one and seems to be case of moving up but there’s a chance it could be used as high end rental. Person does not appear to be employed and my guess would be inherited wealth/property. Id consider this one investor possible

There are essentially no cash investor purchases up here in single family homes. The buyers are a pretty impressive group of law partners, executives, workers at high flying tech/health care companies and financial professionals. they all seem to have bought very nice homes for their families to live in.

[sdrealtor]

[quote=deadzone][quote=sdrealtor]If the tax records indicate a mailing address different than the physical address it’s not a primary residence. There are a few other ways but i think i can answer whether it’s owner occupied with well over 90% confidence level

Second homes are not investment purchases. They are for enjoying

Do you have a zip code to add?[/quote]

Okay, just curious if that is possible to tell how many cash offers are primary. I don’t care about any particular zip, just in general. I understand that 2nd and 3rd home are not necessarily investment properties, but many times if not most times they are. And either way, those homes will be the quickest to be jettisoned in an economic downturn. Also I understand that there are cases where people pay cash for primary, definitely that is more common recently due to the fact that regular people are having to compete with investors and foreign money interests who are paying cash.

In a normal RE market, which we most definitely have not been in for recent years, I expect people paying cash for primary residence was pretty rare.[/quote]

And you would be wrong. In many parts of the country there are lots of cash purchases albeit lower prices in some of them. Its less common here due to high pries but becoming more common as we become more of a destination for the wealthy that can afford those high prices. Considering 2nd or 3rd homes investors is patently false. They are the accoutrements of wealth

[an]

[quote=sdrealtor][quote=deadzone][quote=sdrealtor]If the tax records indicate a mailing address different than the physical address it’s not a primary residence. There are a few other ways but i think i can answer whether it’s owner occupied with well over 90% confidence level

Second homes are not investment purchases. They are for enjoying

Do you have a zip code to add?[/quote]

Okay, just curious if that is possible to tell how many cash offers are primary. I don’t care about any particular zip, just in general. I understand that 2nd and 3rd home are not necessarily investment properties, but many times if not most times they are. And either way, those homes will be the quickest to be jettisoned in an economic downturn. Also I understand that there are cases where people pay cash for primary, definitely that is more common recently due to the fact that regular people are having to compete with investors and foreign money interests who are paying cash.

In a normal RE market, which we most definitely have not been in for recent years, I expect people paying cash for primary residence was pretty rare.[/quote]

And you would be wrong. In many parts of the country there are lots of cash purchases albeit lower prices in some of them. Its less common here due to high pries but becoming more common as we become more of a destination for the wealthy that can afford those high prices. Considering 2nd or 3rd homes investors is patently false. They are the accoutrements of wealth[/quote]Exactly! That’s similar to calling anyone with a savings or checking account an investor.

[teaboy]

Thanks for sharing all this, sdr!
..I might be a little late to the game here, but could we add 92129, too? 😀

tb

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