Here is a question recently posed to CALMatters, a website dealing in housing data for California, "How much are foreign buyers and investment firms—two of the most common sources of all-cash transactions—impacting the average California family’s ability to buy a home?"
All cash sales have been the nemesis of buyers for over a decade. As prices rise, many lower priced homes get snapped up by investors wanting to build a rental portfolio, investors who want to flip properties, or buyers who, if not paying all cash, have a 50% down or more down payment. International buyer numbers have grown, especially on the West Coast, especially in areas such as San Gabriel Valley, Arcadia, San Marino, Newport Beach and Irvine, where buyers from China gained a foothold in the past and have increasingly congregated over time. For Chinese buyers in particular real estate investment is a good strategy, they view American properties as "cheap" compared to what investments cost them in the city/country of origin. While China has been eyed as the competition by buyers here, the fact is that "As recently as 2014, Canadians purchased more U.S. homes than Chinese buyers, according to the National Realtors Association. But right now foreign investors are also favored by the EB-5 visas which grant green cards to large investors.
But the truth is that citizenship or national origin is not specifically a part of any real estate transaction, so there are assumptions made based by tracking the cash transaction statistics, because it is believed such foreign buyers are one of the impacts on prices here. The British Columbia government levied a 15% sales tax on foreign home buyers to curtail the market impact in areas such as Vancouver, but prices are still out of reach of the average family there. Another rule limiting Chinese buyers from taking more than $50,000 to bring here has had some impact, but there may still be ways for purchases to be accomplished. There are arguments over the impact of foreign buyers on statewide pricing, as they tend to target certain properties in some areas. Obviously, there are other things having an impact, such as all the properties bought in the down market by investors which are still off the market and held for rentals, and the fact that fewer housing units are built to keep up with demand.
So how many properties have been cash transactions in Southern California? Go to this
interactive map to find your area. Overall, since 2013, percentages range from 13% to over 30%. Long Beach 90803 zip code is 21%; 90802 is 28%, Newport Coast 33%, Signal Hill 13%, whereas Malibu is 38% cash sales.
Some information is available here for
foreign investors. If you wish to buy in Los Angeles or Orange Counties, please contact me for a comprehensive look at the market, referrals to financing, and details on properties currently on the market. I am a Realtor with over 22 years of experience, and a Southern California native.
