Almost 27 percent of San Diego County home sales were in cash in the third quarter — its highest in seven years.
Attom Data Solutions said cash purchases, instead of loans, were up from 15.4 percent at the same time last year.
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Sellers typically prefer cash buyers because it guarantees money for the home quickly, whereas mortgages can be delayed — or fall through — for a variety of reasons.
San Diego has seen an increase in cash offers before, said Attom records going back to 2000. The real estate data provider said 36.2 percent of homes were purchased with cash in the first quarter of 2013 as the region came out of the Great Recession. At the time, many loan programs were still suspended from the housing crash and that made cash sales more of a necessity.
The difference now is potential buyers face increased competition for a limited number of homes for sale and are trying to make the best offer possible, said Raylene Brundage, a Windermere agent who sells in several North County communities.
“If it’s not contingent on a loan, there is less that can go wrong,” she said.
Brundage said sellers often go for cash sales over other loan types designed for first-time buyers and the military. Those types of loans require appraisals and inspections, making it possible a transaction could be halted. Cash sales not only mean money flows quickly into bank accounts but inspections, which are needed on loans, are often waived. A deal with a mortgage could take a month or longer to complete.
Brundage said she worked with two millennial couples this year who borrowed money from parents so they could make cash offers. Both were successful in getting homes.
The majority of cash sales are coming from typical homebuyers, not investors. Attom said 7.9 percent of sales in the third quarter came from institutional investors.
Real estate agents say buyers are feeling the pressure to come up with cash because most homes are getting multiple offers and they need to stand out. There were around 4,100 homes for sale at the end of the third quarter, said the Redfin Data Center. That was down from 5,300 in 2020, 7,900 in 2019 and 9,300 in 2018.
The median home price has continued to rise with competition. The median price hit $750,000 in November, a record high and a 15.4 percent increase in a year.
A cash sale typically entails a buyer first showing proof of funds (required in almost all types of sales) and then transferring funds from a bank account — or multiple bank …….