All Cash Home Buyers Spurring Higher Prices

Cash purchases made up a larger share of California real estate transactions in the second quarter. Analysts say it's one reason home prices continue to climb - all-cash buyers typically outbid people who are buying with a home loan. 

The median home price in California between April and June was $460,000. Daren Blomquist with research firm ATTOM Data Solutions says that was a seven percent increase from a year ago.

"Also we look at what's driving that price increase," says Blomquist. "And we do see cash buyers - those are up to 23.2 percent in the second-quarter which is up from 21.7 percent a year ago in California."

Blomquist says all-cash buyers are typically foreign and domestic investors.  

On the other end of the spectrum, Blomquist says sales to people taking out Federal Housing Administration loans, typically first-time buyers, are down. Just 14 percent of buyers were FHA purchasers, down from nearly 17 percent a year ago.

The median price for a Sacramento area home in the second-quarter was $439,000. That was up 10 percent from the previous quarter. And it was an eight percent increase from a year ago. Blomquist says homeowners who sold between April and June, on average, saw a 46 percent return.

"That comes out to a nearly $115,000 profit, on average, since the seller's purchased the property, which in Sacramento is the highest we've seen in over 10 years, going all the way back to the fourth-quarter of 2006," says Blomquist.

All-cash sales in Sacramento represented 23 percent of the home sales in the second-quarter, up from 21 percent a year ago. Blomquist says all cash-buyers in the Sacramento region include foreign investors looking to park their cash in U.S. real estate and people migrating from more expensive markets like the Bay Area.

Meanwhile, people who own homes in the Sacramento region are keeping their properties longer.

New numbers show homeowners who sold between April and June had been in their homes an average of nine years. Blomquist says that's at an all-time high...since they started collecting data 17-years ago. He says people started staying in there homes longer after the Great Recession.

"We're continuing to see that," says Blomquist, "even though it seems like a great time to sell and people would be more motivated to sell given that in Sacramento you can make an average of $115,000 profit on the sale of a home."

He says potential home sellers in today's market are caught in a Catch-22. While it's the most profitable time to sell in a decade, it's also extremely hard to find another home to buy.