Cash buyers continue to dominate San Diego real estate market
Last Updated: 183 days ago
SPRING VALLEY, Calif. - Cash buyers are flexing their muscle in the San Diego housing market, according to preliminary numbers obtained by 10News.
At a home in La Mesa, the renovations are just under way to fix and flip it. In Spring Valley, a new addition will be the focal point of another flip.
Both are projects of Roger Faulkner's company RBD Ventures, and all made possible because of cash offers.
"In the business we're in, cash is definitely king," said Faulkner.
Preliminary numbers from San Diego-based DataQuick show 29.5 percent of May home sales in the local market were all-cash purchases.
In May 2005, that number was 6.8 percent.
For current sellers, the cash option is hard to turn down.
"Closing in cash, there's no hang-ups and usually it's quick," said Faulkner.
With inventory low, Faulkner said he's competing against 10 to 20 cash offers on a single property. He said the main competition is hedge funds, which plan to sell in a few years.
"They see a short- or medium-term play and a return on investment by renting those properties out," said Faulkner.
Those properties are generally lower-priced. Faulkner said many first-time buyers bidding on the same properties are getting squeezed out by all-cash offers.
But it's not just investors getting into the all-cash frenzy.
Across the state, about 55 percent of all-cash buyers are investors or those looking for vacation homes -- that means 45 percent aren't investors.
The number translates into plenty of cash offers on non-investment properties, including move-in-ready homes.
Faulker said don't bet on the cash offers drying up.
"I think now, since we're in such an appreciating market, you're going to see more and more cash coming into the market," said Faulkner.
Faulkner said cash offers can get you a 10 to 15 percent discount on the price, but the discounts disappear quickly when there are multiple cash offers.
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