MARY POPE-HANDY – All cash-driven bidding wars are subsiding in Silicon Valley and that’s welcome news for weary home buyers frustrated and discouraged by the competition.
In the past 30-days, ending on July 26, all-cash sales represented 15 percent of single-family and duet homes purchased in Santa Clara County. That’s well off the March numbers when all cash deals were about 25 percent of all purchases, according to data from MLSListings.com.
An unknown number of all-cash buyers obtain loans after the close of escrow, but significantly fewer buyers initiate the deal as all-cash buyers.
Fewer all-cash buyers spell relief for some people shopping for homes.
Unfortunately, first-timers remain at a disadvantage. The lowest-priced properties continue to draw the most all-cash offers.
Prices that garner most all-cash sales
In Santa Clara County, in the last 30 days. there were 967 single-family home sales that closed escrow. Among them 147, or 15 percent, were all cash.
Here’s a breakdown of the top six highest levels of all-cash sales by home price, in $100,000 increments.
• In the price range with the highest percentage of all-cash sales – $100,000 to $199,000 – 80 percent (four out of five) of sales were all cash.
• In the $200,000 to $299,999 range, 20 out of 40 sales or 50 percent were all cash sales.
• In the $1.6 million to $1.7 million range, 33 percent were all cash deals. (Is this a fluke? At $100,000 less the share was just 5 percent and at $100,000 higher the share was 15 percent.)
• In the $1.3 million to $1.4 million price range, 27 percent were all cash transactions.
• Finally, in the $300,000 to $399,999 price range, 22 percent were all cash sales.
A look at larger $500,000 price ranges reveals:
• 22 percent of sales were all-cash in the up-to-$500,000 price range.
• 9 percent of sales were all-cash in the $500,000 to $1 million range.
• 14 percent for the $1 million to $1.5 million group.
• 15 percent in the 1.5 million to $2 million group.
The data indicates move-up buyers are on the move again and first-time home buyers who are shopping in the $500,000-and-above price range have a better shot at competing if they have 20 percent down.
It remains difficult for Federal Housing Administration (FHA) home buyers to compete against those with a larger cash down, especially for homes under $300,000 or $500,000.
To understand this dynamic see: “Why do sellers care if the offer has a loan or is all cash?” for further details.
Mary Pope-Handy is a real estate agent with the Sereno Group in Los Gatos and author of “Get the Best Deal When Selling Your Home in Silicon Valley.” Get the best deal in local real estate news and information from Pope-Handy at “Live in Los Gatos (CA)” and “Valley of Hearts Delight.”