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Ever since the housing market collapsed, CA investors have been searching for deals, typically paying cash for properties that they can resell for a tidy profit. In Sacramento County and West Sacramento, investors paying cash accounted for one in four home sales over the past year. In Socal, absentee buyers (mostly investors and some second-home purchasers) bought 22.3 percent of the homes sold last month, according to Dataquick, up from 16.6 percent a year earlier. It was the highest level for any month since at least 2000. More buyers have paid all cash - 29 percent - than at any time in more than 20 years. From the Sacramento Bee:
Cash buyers can obtain discounts not available to others, and their purchases seldom fall out of escrow. They have pushed aside first-time buyers who can't compete. "I have lists and lists and lists of houses I have looked at and put offers on. Everything has been investors, investors, investors," said Kimii Carter, a city employee in West Sacramento. Carter said she made offers on 30 houses south of downtown Sacramento, including a $145,000 bid on a $114,000 listing she wanted for herself and two daughters. "They said, 'We already have a cash offer,' " Carter said.
If this sounds eerily familiar to what was going on during the bubble, well, it is. Get a look at this pitch from the Web site IBuyHouses.com:
We Buy Houses fast for cash regardless of the size, price, or condition across the US. Depending on your house and your situation, we may pay full market value--you can sell a home fast with IBuyHouses.com! We can close quickly and most importantly, relieve your stress and help you regain peace of mind.
The difference, of course, is that speculative purchases have not resulted in prices going up. Just too many foreclosed properties. Meantime, many first-time homebuyers are being priced out of the market. From the Washington Post:
"There are bidding wars out there. It's like the 2005 market but at discount prices," said Stella Barbour, a real estate agent at Jobin Realty in Northern Virginia. "I put in offers for my clients only to find there are already multiple offers. They always choose the one that's all cash." Some of these cash-only investors use their own money to buy properties, while others borrow it at high interest rates from other private sources. Chris "CC" Cormack, an investor, said she used her own money to beat out four other offers and buy a townhouse in Ashburn this year. The home, a foreclosure, was listed for $214,500, and she got it for $220,000. Cormack fixed it up and sold it a few months later for a sizable profit.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.