Who are all these cash buyers in Carmel Valley??

[FlyerInHi]

I agree ocrenter. And when people see people different from themselves pay for expensive things they cannot afford, they wonder what’s wrong.

I read somewhere dataquick reported 30% of transactions being cash. So according to SD realtor’s data, 20% all cash is low for Carmel Valley.

Buying cash is so much easier. Close within a couple weeks. Depending on your comfort level, no need for appraisal, title insurance, or inspection. No need for the notary signatures either because all you need is the grant deed from the seller.

[SK in CV]

[quote=FlyerInHi]
I read somewhere dataquick reported 30% of transactions being cash. So according to SD realtor’s data, 20% all cash is low for Carmel Valley.

[/quote]

I’m not exactly sure what you mean by “20% all cash is low for Carmel Valley”. Assuming you’re not disputing SDR’s data, I think what you’re saying is that the 20% call cash in CV is lower than the all cash percentage in the rest of the region.

And that makes perfect sense. We’ve heard for quite awhile about all cash investors buying up property with the intention of holding and renting units. There will always be some all cash purchases for owner occupancy. CV is not traditionally been a good market for SFH rental property for investors. I doubt there have been a lot of all cash purchases by investors, with the intent of renting out the units. It’s been, and probably continues to be, among the worst markets for that kind of investment. They’re buying in lower priced markets where rental rates can generate decent cash flow. Can’t easily do that in the CV detached home market.

[ocrenter]

[quote=FlyerInHi]I agree ocrenter. And when people see people different from themselves pay for expensive things they cannot afford, they wonder what’s wrong.

I read somewhere dataquick reported 30% of transactions being cash. So according to SD realtor’s data, 20% all cash is low for Carmel Valley.

Buying cash is so much easier. Close within a couple weeks. Depending on your comfort level, no need for appraisal, title insurance, or inspection. No need for the notary signatures either because all you need is the grant deed from the seller.[/quote]

Especially if the property is an investment property. People can simply mix cash out refi along with savings to come up with cash for purchase. Or pay cash for a purchase, then obtain cash out financing, so they can use the cash for another purchase. We can’t make the assumption that cash purchase money is just 100% pure cash.

As for CV, you are looking at a group of people quite fixated on education and whose ability to save typically shock the average American. The fact that you’ll see Chinese cash buyers in CV is totally expected. I would have been shocked and puzzled if I don’t hear stories of Chinese cash purchases in CV!

[flyer]

We’ve actually done very well on our SFH and condo investments in CV, but we did purchase the properties many years ago. Compared to some of our other real estate investments in San Diego and elswhere, CV has probably been one of the most stable markets in which we’ve ever been involved with regard to rentals.

[SD Realtor]

I dont understand the comment either. The % of cash purchases for detached homes was below 20% of the total.

Of those cash purchases the majority of them were for the lower end homes (cheapest homes) in CV.

[Coronita]

[quote=bearishgurl]

Well, flu, without revealing too much, can you tell us if you know the address of jimmy’s short sale listing and if so, if you thought it was “great deal?”

Just wondering . . . and hey, it’s great to hear that you’re still out there looking for opportunities 🙂

Did you ever get your own RE license?

Hello out there, flu . . .

[/quote]

I’m really not back to this forum…But I’ll respond to this in case this question raises concern for others….

BG, no I will not discuss anything that I talk about with others via elsewhere.. I will not even discuss if those individuals even responded to me or if they provided any information.

A lot of relationships (new or old) is based on trust, and I’d like to keep it that way. If the individuals have any information they would like to share openly, they would have already…And if they didn’t and you are curious about it, you are welcome to ask them yourself without me being a proxy.

As far as what I’m doing, I’d like to keep that off the radar too. So I’m going back into every-so-often lurk mode.

Take care.

[bearishgurl]

Fair enough, flu. I haven’t contacted jimmy to find out any info on his nefarious (actual-but-hidden-to-the-public SS) escrow. I wasn’t really interested in the minute details because the premise is the same . . . Holmes rules the day and that is all there is to it.

However, I think the Piggs would be interested to learn if you obtained your RE Salesperson license … or not by now. That seemed to be one of your goals at the end of 2012 as you seemed very tired of the 8-5 grind. You posted repeatedly here that you wanted to create a reliable income stream which was not “W-2 income” and wanted to create a stream of “passive income” for you and your family.

[earlyretirement]

[quote=ocrenter]

All cash purchases trigger something within us. Be it envy, disbelief, or shock. People also tend to repeat stories of all cash offers over and over. This is why within the anecdotal world, it seems like every home in CV are all cash purchases.[/quote]

So spot on target as usual ocrenter! People in the US for the most part many times are envious and shock or disbelief as you mentioned when they hear people that buy 100% cash. They think there is something wrong with the buyer or think something is wrong or the buyer is stupid, yadda yadda yadda.

I’ve seen this happen many times over the years. I remember during the bubble here when I warned friends about the bubble and how and why it was going to pop. At the same time, I started buying up real estate in other parts of the world without leverage. I remember many people telling me how stupid I was for not using leverage and buying up properties in the USA. “Easy money” they said.

Several parts of the world, buying with cash and no mortgages is totally normal. The funny thing is many Americans think how we do things in the USA is how things are done everywhere which just isn’t the case.

[quote=FlyerInHi]I agree ocrenter. And when people see people different from themselves pay for expensive things they cannot afford, they wonder what’s wrong.

I read somewhere dataquick reported 30% of transactions being cash. So according to SD realtor’s data, 20% all cash is low for Carmel Valley.

Buying cash is so much easier. Close within a couple weeks. Depending on your comfort level, no need for appraisal, title insurance, or inspection. No need for the notary signatures either because all you need is the grant deed from the seller.[/quote]

EXACTLY as you mentioned FlyerinHi! From my experience, even people that probably could afford to buy cash don’t many times because they think they can “leverage” themselves into a situation where they can make even more money when that isn’t always the case.

And I’ve personally witnessed MANY times when people that thought they could successfully leverage and make a “fortune” lose it all. I’m not saying leverage isn’t useful or wise because it certainly can be. But you know what I mean here.

So true about things being VERY easy when you buy with cash. VERY QUICK closings, no appraisals needed, no inspection (or an inspection with a promise that NOTHING will be asked of the seller unless there is some MAJOR problem discovered). Everything is quick and easy. Not to say no due diligence is done but it just makes things very easy when cash is involved.

[FlyerInHi]

SK, sometimes I write too fast and don’t think. Doing all of that on iPad and multitasking tasking also.

I was just surprised that CV had only 20% all cash compared to 30% for the region (I remember something about dataquick reporting that). But you gave a good explanation – prices are higher in CV and it’s harder for investors to make money on rentals.

[flu]

[quote=FlyerInHi]SK, sometimes I write too fast and don’t think. Doing all of that on iPad and multitasking tasking also.

I was just surprised that CV had only 20% all cash compared to 30% for the region (I remember something about dataquick reporting that). But you gave a good explanation – prices are higher in CV and it’s harder for investors to make money on rentals.[/quote]

There might be another angle to it…People might throw in all cash offers to get the house. But during escrow, there’s nothing preventing them from trying to get a loan while in escrow (so long closing isn’t contingent on the loan). Afterall, at closing, no one cares where the money came from as long as it’s there. Of course the only people who can play this game are people with money to begin with.

[ocrenter]

[quote=FlyerInHi]SK, sometimes I write too fast and don’t think. Doing all of that on iPad and multitasking tasking also.

I was just surprised that CV had only 20% all cash compared to 30% for the region (I remember something about dataquick reporting that). But you gave a good explanation – prices are higher in CV and it’s harder for investors to make money on rentals.[/quote]

I think the reason is probably pricing. higher the price for the market, more difficult to purchase all cash.

also, much less investor activities. wasn’t most of the stories about all cash purchases involving starter homes in sub-par neighborhoods snatched up by investors or flippers?

[ocrenter]

[quote=earlyretirement]

Several parts of the world, buying with cash and no mortgages is totally normal. The funny thing is many Americans think how we do things in the USA is how things are done everywhere which just isn’t the case.

[/quote]

The US runs on credit, the rest of the world still run on cash. One thing when traveling abroad that I realize is almost everyone uses cash, and the habit and convenience of running your plastic is just not there. It does take some getting used to. But thinking about it, my convenience of using the card here is built on the financial fees levied on my less financially savvy fellow Americans.

[SD Realtor]

People that throw in all cash offers and then change the financing terms in escrow are defaulting on the contract. They usually get punted because there are higher financed offers.

[SK in CV]

[quote=SD Realtor]People that throw in all cash offers and then change the financing terms in escrow are defaulting on the contract. They usually get punted because there are higher financed offers.[/quote]

Thanks for adding this. The claims that this was regularly happening seemed dubious to me. One of the main advantages to a seller of accepting an all-cash offer is a quick closing. And as HLS has pointed out, it’s extremely difficult and unlikely to get a loan closed in less than 30 days. That this was actually happening seemed more speculation than based on reality or any first hand knowledge.

[bearishgurl]

[quote=oooreallly][quote=FlyerInHi]SK, sometimes I write too fast and don’t think. Doing all of that on iPad and multitasking tasking also.

I was just surprised that CV had only 20% all cash compared to 30% for the region (I remember something about dataquick reporting that). But you gave a good explanation – prices are higher in CV and it’s harder for investors to make money on rentals.[/quote]

There might be another angle to it…People might throw in all cash offers to get the house. But during escrow, there’s nothing preventing them from trying to get a loan while in escrow (so long closing isn’t contingent on the loan). Afterall, at closing, no one cares where the money came from as long as it’s there. Of course the only people who can play this game are people with money to begin with.[/quote]

Flyer, I believe CV’s lower percentage of all-cash buyers than county buyers overall is due to other reasons as well. That is that the bulk of buyers in CV are “worker bees” seeking housing close to work centers, many of whom have children for whom they want to enroll in its good public schools. This particular subset of buyers (young and youngish families) aren’t typically cash buyers because they don’t yet have the resources.

Another HUGE subset of “all cash” buyers are “empty nesters” and vacation-home buyers who are retirees or soon-to-be-retirees (both American and foreign). Not only does this demographic often NOT want a mortgage going forward, they have the means to pay cash for a property and some cannot otherwise qualify for a mortgage by today’s lending standards. There are no other “redeeming qualities” to CV properties (nearly 100% on tract and a good portion situated on substandard lots) except proximity to work centers and good schools. I believe that “celebrities,” retirement-home buyers and vacation home buyers in SD County using all-cash for PM are looking for LOCATION if they can afford it. SIZE doesn’t matter as much. For example, if they can get a 1400 sf WWII box in Roseville (Pt Loma) situated less than a mile uphill from where their 34-ft cabin cruiser is slipped (which they brought down here from points north), that will be just fine. Coronado and LJ are also favored by this subset of buyers, even for condos. Many of the “retiree” buyers without a pile of money to spend for a house will pay cash nonetheless but want a house close to relatives or as close to the city or water (harbor incl) as they can afford. Many of these boomer-buyers live in the “flyover states” and actually grew up in SD. They will buy a home using all-cash in Chula Vista or Lemon Grove if that is where their family members live. This happened a LOT during 2009-2011, when these buyers’ friends and relatives “back home” in SD alerted them to nearby bargains in their old neighborhoods which had virtually “unheard of” asking prices at the time.

A fourth type of “all-cash” purchaser in SD County are those seeking land, with or without a house on it (more rare than the other types). These are usually local business owners seeking a place to park company vehicles and/or have horses. They often don’t care if utilities have not yet been brought to the property. They have the connections and know-how to bring utilities there and build/remodel a house for their families on the property. This type of buyer often grew up in the area they are seeking land in or within a few miles of it. If a house sits on the piece of land they buy, they often won’t occupy said house until it is refurbished to their liking and they will undertake this refurbishment themselves or contract all or part of it out themselves. Several areas of East and North County and a couple of areas of South County are VERY attractive to this subset of buyers, especially in those areas where relatively flat, useable lots still exist.

Unlike counties in some “flyover” states where the entire county is as flat as a pool table and all the same temperature, SD County offers diversity in geography, views and weather for everyone, which is attractive to many out-of-state buyers. Proximity to tech jobs or perceived “good schools” only matters to a small subset of buyers who are overwhelmingly youngish worker bees in certain occupations. There ARE many other types of buyers and RE markets out there where all-cash is frequently used for purchase money.

[Author]

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