Nearly half of all home sales all-cash deals

[pinkytoe]

I find this an incredible statistic; sounds like many are foreign buyers:
http://money.cnn.com/2014/05/08/real_estate/cash-home-sales/index.html?iid=HP_LN
In our neighborhood, it is mostly people buying second homes, ie wealthy people who have homes in several locales or transplants who have moved from places that were more expensive.

[gimmethesimplelife]

I have heard this too is true in Arizona. More and more people are having a hard time qualifying for mortgages and here anyway, wealthy Canadians are swooping down to buy investment properties. Often in cash. This boggles my mind but so it is. Rob

[tetrimbath]

There was also a report out that in some cities many of the all-cash deals were investors/corporations buying up houses to turn into rentals or as speculation.

[ApatheticNoMore]

Yea but I've heard even the investors are starting to flee now (they were buying but less so): so another bubble going pop?

[CathyA]

I just saw a sign yesterday that was for a home loan with no money down. Are we headed into the past again?

[dmc]

I'm closing on my house on Monday. The buyer didn't seem to have any problem getting a loan. I did have a cash offer, but I had already made a deal with the first guy. The cash buyer was a local, he owns the marina here.

I'll probably be paying cash for my next house, it just depends on how I feel at the time.

And hopefully the banks have made it a little harder to get a loan. Like actually check and see if the people getting the loans can actually pay them back.

[dmc]

There was also a report out that in some cities many of the all-cash deals were investors/corporations buying up houses to turn into rentals or as speculation.

Looks like they may have made a good investment. Most markets have risen in the last couple of years. I could have bought a house in the area that we are moving to two years ago for quite a bit less than I'll have to pay now.

[awakenedsoul]

Interesting article. I know a couple of retired women who own two or three rental properties a piece. They own them outright, and they live off of the income. I'd like to do the same someday. The whole thing is, timing the market so that you can buy low and hold. I guess if I can keep my expenses low, I won't need to buy another property. It's a lot of responsibility.

[Lainey]

When you said "live off the income" it reminded me of a news story years ago. An older widow was the owner of a small rental house. She too need that rental income to live on, but unfortunately, she either did not or could not put aside any of that money over the years for maintenance.
As a result, the rental house fell into disrepair bad enough for the city to get involved. She was on the TV news complaining that she needed all of the rent for her own needs, so how was she supposed to make the needed repairs?

Moral of the story - and I'm not saying this is in any way related to the women you know - is that landlords need to be responsible and not just use these rental places for their cash flow without considering building maintenance.

[RosieTR]

The entity that bought our house in AZ was a cash buyer. And jerked us around, too. Felt like we got screwed by the wealthy but also the down-and-out, since the renters did damage and then either they or their meth head friends came back and did more. I can't even try to care what happened to the house or neighborhood. Most of the neighbors we knew in the few years we were there foreclosed and left anyway, so any feeling I might ever have (and only when I'm reminded by a story about the housing market) is pretty much flat-out relief not to be involved at all any more.
If investors speculate and lose their shirts again I won't be very sympathetic, but I will be angry if I have to contribute to bail them out again. I'm getting more "get a home equity loan!" flyers in the mail so maybe the bubble is starting to foam up?

[rodeosweetheart]

We bought our last two houses for cash. One was bank owned, the other had been bought by someone as a foreclosure house, but he decided he did not want to do the work involved to flip it, so he sold it 2 months later.

First house was about 10 thousand under the real market value, i.e., what you can sell the house for easily, and it needed at least 10 thousand to make it habitable. The foreclosed owner had trashed the house and taken heating systems, sinks, etc.

Second house needs a lot of money to make it any kind of investment. We live here comfortably, but it needs at least 10 years of deferred maintainance in the house, 20-40 in the outbuildings. Could not even rent it out if I wanted.

If someone wants to put their money in rental houses rather than the stock market, why not?

I am seeing a lot of people buy for cash and then put in an equal amount to fix up the house--tons of housing are falling apart as we speak. I personally don't care whether they are bought by people to live there or to rent out--I think it is better than watching them fall apart, watching whole neighborhoods go down to blight.

If I were back in SC I would be buying cheap cheap cheap deals for rentals, you bet. My job is unreliable and it is a struggle to work at this point due to health issues. I don't see why buying rental houses is a horrible thing. I do think it's pretty risky--Rosie, the man across the street could not sell so rented his out, rent to own, and claims he never saw a penny, and they caused much damage. Same thing happened to my friend in SC.

The second house market is a different breed of cat--all my houses have been primary residence houses, so can't speak to the Canadians going to Arizona to buy property. There were many in SC, proving only that they have the right idea bout health care, and they are not stupid.

[CathyA]

Maybe I just have too many other things to take care of, but the idea of having a rental is nothing I would really want to deal with. I guess I'd rather fix it up and sell it. I've heard too many horror stories about rentals.
But lots of people probably feel different........and have alot more energy than I do!

[ToomuchStuff]

I received a call to go look at some storage bits that a friend added to a bench yesterday. (effectively giant drawers) Former mayor was moving and as a local one who helped with a garage build, I was offered some. He sold the home for all cash, to a Chinese investor. I know a few years ago, it was a big news story about how they were buying up property, as a government/companies, but now seems to be individuals who have made it big over there.

[awakenedsoul]

Lainey,
One of these women made that mistake. (Her husband was in construction, so he always did the maintenance.) After he died, she trusted the renter to do repairs, and he ended up becoming depressed and the place went downhill. She had to replace the roof., which really upset her. (She didn't go check on the property regularly.) The other lady has had no problems. She rents her two homes out, and lives in an apt. rental. She's a real go getter, though. Very motivated and disciplined.

The people in our area who have bought the foreclosures live in them. They have done a remarkable job of improving our neighborhood. They've also planted beautiful gardens. It has made such a difference when you walk the dog, or go for a bike ride. My little house was an eyesore when I bought it. it had good bones, though. It's amazing what painting, cleaning, and planting a cottage garden can do. I love real estate, and probably will go that route if I can afford to buy another tiny house outright. I found one up in the mountains for $39,000. a couple of years ago. It was little, but darling. Something like that I would do...

[Teacher Terry]

When we bought our foreclosure 2 years ago the bank would only take cash offers with no inspections. They lowered the price way below value & gave people 24 hours to make the best offer. They were asking 52 so I decided that most people would stay in the 50's so we offered 60 & got it. My hubby is a civil engineer so he knew how much $ it would take to fix it up if he did all the labor. We now have 40 more in it and about 5 more to go but it is now worth 200. We have no plans to sell plus we love living mortgage free. If we would have had more $ 2 years ago was the time to really make some big $ but that time has passed.

[rodeosweetheart]

When we bought our foreclosure 2 years ago the bank would only take cash offers with no inspections. They lowered the price way below value & gave people 24 hours to make the best offer. They were asking 52 so I decided that most people would stay in the 50's so we offered 60 & got it. My hubby is a civil engineer so he knew how much $ it would take to fix it up if he did all the labor. We now have 40 more in it and about 5 more to go but it is now worth 200. We have no plans to sell plus we love living mortgage free. If we would have had more $ 2 years ago was the time to really make some big $ but that time has passed.

Terry, this is kind of the way we did things, too.

Most of these houses are not mortgageable, anyway. That was what we found--when we were looking at houses with a mortgage, none of the houses could get one unless it was a crazy rehab mortgage, VERY expensive, and we didn't hav ethe money to both do the work it needed and pay the mortgage.

So these houses are being sold cash only in many cases because no one can get a mortgage on them--can't get a mortgage without a furnace or even a stove. Standards have gotten much tighter.

[Teacher Terry]

Since we lost $ in some other real estate deals for once we were a winner. Our neighborhood is older but nice and we are seeing more people buy the homes & fixing them up. Some owners have been here forever & are keeping their homes up. We are seeing more owner occupied now because the prices are going up and that all could change if prices drop again. As long as homes are kept up I am fine with rentals too.

[Yarrow]

I paid cash for my little house I bought last year after my divorce.

The buyer for my Mother's house paid cash. Her neighbors were very concerned that he was buying it for a rental income, but he is still there 5 years later and has improved upon the property alot. Which makes me happy since it is my childhood home. Good to see it kept up and looking so nice after all these years...

[happystuff]

When the time comes, my hope is to buy a tiny house for cash. With the rental prices I see in my area, I could never afford to rent - even a small studio apartment! My mortgage payments (with insurance, taxes, etc) are significantly less than rental payments I hear about and read about, again in my area. This really surprises me.

[awakenedsoul]

That's one of the reasons I bought my house. Rents here are sky high! When I moved here, I paid half my SO's mortgage. That was $375. a month. After we split up, I moved into the house where I live now. My rent back then was $675. a month. Now, rents here are $1,000-$1,400. a month. I've lived in this cottage since 1997. I'm so glad I wasn't renting all that time. The orchard in back that I planted has been a good investment, too. It's a good feeling to have fruit year round...

[Gardenarian]

We bought our first house with a mortgage, but once that was paid off our subsequent houses were bought cash. (We paid $145 for our first house, which sold for $475 9 years later. We had saved enough to buy our current home for $600.)

I wouldn't be surprised if a lot of these cash buyers are from California - you can make a fortune in real estate here. A lot of people wait till the market is tops, then sell out and move to a less expensive area.

[awakenedsoul]

So true. My parents bought a home in the Bay Area for $140,000. thirty years ago. Now it's worth 2 million dollars! My dad was so nervous when they bought it. Their property taxes are $3,000. a year...

[ToomuchStuff]

We bought our first house with a mortgage, but once that was paid off our subsequent houses were bought cash. (We paid $145 for our first house, which sold for $475 9 years later. We had saved enough to buy our current home for $600.)

I wouldn't be surprised if a lot of these cash buyers are from California - you can make a fortune in real estate here. A lot of people wait till the market is tops, then sell out and move to a less expensive area.

I read this, and saw you listed yourself in the SF bay area. I had quite the laugh because at first I read it as typed (bought house for $145 (no comma's etc, reads as $145.00)) and thought was it already underwater, IN the bay, ahem, area?

Doesn't help that I just had a conversation with a semirelative that has lived in her home for 68 years and bought the property for $2500.

[Simply Divine]

When the time comes, my hope is to buy a tiny house for cash. With the rental prices I see in my area, I could never afford to rent - even a small studio apartment! My mortgage payments (with insurance, taxes, etc) are significantly less than rental payments I hear about and read about, again in my area. This really surprises me.

It's the same here where I live. Rent for a decent one-bedroom/bath is about the same for a small, older 3 bedroom/2 bathroom house -- about $1000 or so. I'd love to move into a tiny house. My concern is where would I put it (legally).

[tetrimbath]

An Atlantic article has some data and insight into which people and organizations are buying houses now. It is part of a discussion about student debt and its effect on mortgages and the housing market.
http://www.theatlantic.com/business/archive/2014/05/are-student-loans-really-killing-the-housing-market/370809/

[ToomuchStuff]

Anyone have an idea of where some good homeownership data can be found? (I am wondering what percentage I would have been in, as a first time homebuyer at 22)

[Spartana]

I also bought my home for cash (as I did my last place also) and I think that a lot of the cash sales are driven by Boomers downsizing as they retire, as well as by investors. In my current 'hood it's definitely investor driven but in my last place it was both retiree driven as well as second home driven (and probably bought with a loan on the first house to buy the vacation place with cash).

[Spartana]

When the time comes, my hope is to buy a tiny house for cash. With the rental prices I see in my area, I could never afford to rent - even a small studio apartment! My mortgage payments (with insurance, taxes, etc) are significantly less than rental payments I hear about and read about, again in my area. This really surprises me.This kind of happened during the housing bust in Calif recently. People moving out of their very high priced underwater houses due to foreclosures, and moving into what was a less expensive apt in comparision to their monthly mortgage. But the new buyers who bought the foreclosed house for a song, ended up having a much smaller mortgage payment then what it would cost to rent as rents were still high (and rising due to a greater increase in renters due to a greater increase in foreclosures). That has changed back now in the houses have appreciated greatly and so a monthly mortgage would most likely be much higher then monthly rent - especially when you add in all the other costs involved with home ownership and to buy a house. I plan to rent once I sell my house but am free to move to a much less expensive area so won't have to worry about too high of rent prices.

[Spartana]

I'd love to move into a tiny house. My concern is where would I put it (legally).Are you talking about a mobile home? Or an RV type "small house"? I know that in many places you can park an RV in your driveway or back yard but technically aren't suppose to have anyone live in it. Same with RV's on land you own - you can park them there but have to have a legal "abode" - mobile home or house - and aren't suppose to have anyone living in the RV. That's how it seems to be in Calif at least but I know I have seen places in Washington and Oregon (and maybe remote parts of NorCal) where you can park an RV or trailer on a pad that has electric, water and septic and it's all legal. Of course you have to buy or rent the land first so an added expense. Otherwise, if small houses on their own lots are fairly inexpensive in your town that might be the way to go.

[Teacher Terry]

I think that the Cali retirees have made a big impact on Nevada home prices thru the years because they sell their expensive home & then move here and can buy a lot more for their $. It is one factor in rising home prices here now & in the past. There are other factors too but this definitely has an impact. I don't blame them of course because I would probably do the same thing. Some I have met said that is the only reason they could afford to retire.