At Home in Upland

It's Simple - Just Pay CASH... Yeah... Right. Well Maybe.

The understatement of the year is that "real estate has, and continues to change". What we were all accustomed to several years back probably is no more. A recent Los Angeles Times article by Lauren Beale titled "More Home Buyers Offer Cash Deals" tickled my curiosity to see if what was happening in Balboa on top-end-sales was also happening in "My Little Corner of the World".

Having preached that real estate is local, here's what I studied:

• The Inland Empire cities of Upland, Rancho Cucamonga, Claremont, La Verne, Ontario, Pomona, Chino, Chino Hills, Fontana and Corona. Quite a varied mix of communities in "My Little Corner of the World" (MLCOTW).
  
• All data is for January and February, 2011 sales.
• All price ranges were included save one chart.
• Includes SFRs, Condos and Townhomes.

In January & February, 2007, CASH Transactions were 3.9% of the Total.

Fast forward to the present - CASH Transactions represent just under 28% of our total. Were these all high end? Absolutely Not. There were only 8 sales of $1,000,000 in MLCOTW, 5 of which were all cash. 62.5% if the top end sales were CASH. Especially important is the fact that there were 507 low to mid range sales UNDER $999,999 that were ALSO ALL CASH.

Obvious to real estate practitioners is the presence of the investor, who makes a business of bidding for some share of the properties at Trustee Sales or competes for the bargain property with CASH. Many would be buyers needing to secure a loan have been aced out of bids by Cash carrying investors who bring less risk of a failed transaction to the table.

So, Are buyers to throw in the towel?

Clearly, CASH transactions are important to the industry. But, it is VERY interesting to look at the OTHER 72+% of the sales for a reality check. Of the 1845 January and February, 2011 sales in MLCOTW, conventional and FHA loans were the financing of choice (see chart),

My perception was that CASH transactions would be much batter for the seller because the deal happens fast.... Slam - Bam - Thank You Mam - Done. Not really that much faster. These cash sales were on properties that were on the market for an average of 73 days. Sales with FHA loans were on the market an average of 76 days, and properties purchased with Conventional loans experienced 79 Days On the Market. NOT THAT MUCH DIFFERENCE!

It's Simple - Just Pay CASH... Yeah... Right. Well Maybe. Then again, if you're not an investor and not looking at the $1,000,000 Plus market, the reality of buying your dream home will likely involve securing a loan. It's worth it!

Photo Credit - from Flickr, Creative Commons by AMagill