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If the source of that cash is the stock market - or money gained from selling a previous house... Are cash buyers really 25% of the market in the US?

by seper8 4y ago

chasebank 4y ago
I think you're on to something here. My local anecdote - a few of my realtor friends said roughly 70% of all transactions in the last two years in Santa Barbara area have been cash deals. They also said currently those deals are all dried up. From what little research I've put into it, from the county assessors office it looks like 2.5k homes were sold last year in the area. Now think about this, we had an overwhelming number of people from LA and SF flee to Santa Barbara during the pandemic. How many of those people had temporarily won the stock option start-up lottery, ie. any tech bubble employee - zoom, pelaton, doordash, etc, or had a house that had spiked in value willing and was willing to swap homes. It doesn't take much when housing supply is at historic low and temporary bubble demand skyrocketed to throw the market all out of whack. Personally, I know at least 10 people that traded their zoom stock for all cash housing deals here in SB at the right time. Now that stock is worth 1/8 of what is was. I imagine that this scenario played out a few hundred times just in our little town. Extrapolate that nationwide, you can see what might have contributed to massive asset valuations that quite literally, don't make sense. In the long run, it shouldn't matter, however it will be fun to watch it all play out.
spacemadness 4y ago
Some “cash buyers” were actually taking loans against their stock assets.
- lesuorac 4y ago
  And then a lot of them will take out a mortgage to payoff the loan against the stock after the house is purchased. Cash buying is one of those terms people don't understand. You're almost never getting a suitcase of 100's.
  - __derek__ 4y ago
    > You're almost never getting a suitcase of 100's. And if you are, you may want to follow your escrow agent as they run out the door.
ska 4y ago
> Are cash buyers really 25% of the market in the US? Not in the sense that they didn't finance part of the purchase, as I understand it. It just means the cash is already there from the point of view of the buyer.

If the source of that cash is the stock market - or money gained from selling a previous house... Are cash buyers really 25% of the market in the US?

by seper8 4y ago

If the source of that cash is the stock market - or money gained from selling a previous house... Are cash buyers really 25% of the market in the US?

chasebank 4y ago

I think you're on to something here. My local anecdote - a few of my realtor friends said roughly 70% of all transactions in the last two years in Santa Barbara area have been cash deals. They also said currently those deals are all dried up. From what little research I've put into it, from the county assessors office it looks like 2.5k homes were sold last year in the area. Now think about this, we had an overwhelming number of people from LA and SF flee to Santa Barbara during the pandemic. How many of those people had temporarily won the stock option start-up lottery, ie. any tech bubble employee - zoom, pelaton, doordash, etc, or had a house that had spiked in value willing and was willing to swap homes. It doesn't take much when housing supply is at historic low and temporary bubble demand skyrocketed to throw the market all out of whack. Personally, I know at least 10 people that traded their zoom stock for all cash housing deals here in SB at the right time. Now that stock is worth 1/8 of what is was. I imagine that this scenario played out a few hundred times just in our little town. Extrapolate that nationwide, you can see what might have contributed to massive asset valuations that quite literally, don't make sense. In the long run, it shouldn't matter, however it will be fun to watch it all play out.

spacemadness 4y ago

Some “cash buyers” were actually taking loans against their stock assets.

lesuorac 4y ago
And then a lot of them will take out a mortgage to payoff the loan against the stock after the house is purchased. Cash buying is one of those terms people don't understand. You're almost never getting a suitcase of 100's.
- __derek__ 4y ago
  > You're almost never getting a suitcase of 100's. And if you are, you may want to follow your escrow agent as they run out the door.

ska 4y ago

> Are cash buyers really 25% of the market in the US? Not in the sense that they didn't finance part of the purchase, as I understand it. It just means the cash is already there from the point of view of the buyer.