Cash Buyers

User Forum Topic
Submitted by sdrealtor on June 10, 2022 - 9:26am

Starting a thread so I dont forget. Still have not gotten a Zip code selection from DZ

For now its gonna be

92009
92130
92122

Im gonna throw in a more urban one like North Park. Will also try try to do some digging into 92037

It is gonna take some time but general plan is to identify what % of sales are cash (attached and detached) and what do those cash buyers look like (investor vs owner occ).

Am I missing anything?

Submitted by deadzone on June 11, 2022 - 8:26am.

Coronita wrote:

Again, dz, why are you so combative on this minor distinction of whether a vacation home is or is not an "investment"? In the greater scheme of things, vacation homes does not fit your conviction that these are homes that will be sold in a firesale if there is a downturn in housing because they are typically owned by wealthy people who aren't stretched thin and be inclined to sell because a stock market or real estate market

I'm combative? Your are one who is combative, spewing out 1000 word essays in response to every thing I post.

That said, the distinction of vacation home vs. investment is a fine line. The point is, thanks to the Pandemic, folks on the upper end gained extraordinary amount of wealth, as a direct result of the 5 trillion dollars of Fed money printing and government handouts. That is what led to an increased expenditures on vacation homes, Ferraris, etc. during this period. Whether you can classify those 3rd homes as investments or not is debatable. But what is not debatable is the amount of wealth that was generated during Covid and that many of these "wealthy" buying vacation homes were not able to do so prior to Covid.

So looking forward, all of that Fed money printing is now coming home to roost in terms of massive inflation (who could have predicted that?). Fed is pivoting, interest rates going up, asset markets are in the process of crashing, margin calls will result. Much of this recent Covid wealth effect will be vaporized and those 2nd and 3rd vacation homes will be the first to go when the margin calls are hit.

Submitted by Coronita on June 11, 2022 - 9:47am.

deadzone wrote:
Coronita wrote:

Again, dz, why are you so combative on this minor distinction of whether a vacation home is or is not an "investment"? In the greater scheme of things, vacation homes does not fit your conviction that these are homes that will be sold in a firesale if there is a downturn in housing because they are typically owned by wealthy people who aren't stretched thin and be inclined to sell because a stock market or real estate market

I'm combative? Your are one who is combative, spewing out 1000 word essays in response to every thing I post.

That said, the distinction of vacation home vs. investment is a fine line. The point is, thanks to the Pandemic, folks on the upper end gained extraordinary amount of wealth, as a direct result of the 5 trillion dollars of Fed money printing and government handouts. That is what led to an increased expenditures on vacation homes, Ferraris, etc. during this period. Whether you can classify those 3rd homes as investments or not is debatable. But what is not debatable is the amount of wealth that was generated during Covid and that many of these "wealthy" buying vacation homes were not able to do so prior to Covid.

So looking forward, all of that Fed money printing is now coming home to roost in terms of massive inflation (who could have predicted that?). Fed is pivoting, interest rates going up, asset markets are in the process of crashing, margin calls will result. Much of this recent Covid wealth effect will be vaporized and those 2nd and 3rd vacation homes will be the first to go when the margin calls are hit.

Look dude. You're in an alternative facts reality when you make.baseless statements that are false. Someone corrects your falseness and you end up reaching for corner cases to try to prove you point that you arent wrong. Multiple people have called you out at this point. If you were QA, you'd be the guy that despite things working, you're looking for the one test case that causes a UI formatting issue if you rotate the phone 300 times in a row....and everyone else is like really dude?

Submitted by pinkflamingo on June 11, 2022 - 12:36pm.

I appreciate both points of views. DZ thinks that there will be deflation. Others think that we'll have inflation and or leveling.

Only time will tell. The Fed's zero interest rate policy took two years for housing prices to get to this level. Here is an example of the insanity https://www.redfin.com/CA/Encinitas/656-...

I'm thinking it will take about the same amount of time for it to go down. With a big if. JPow is not PVolker no matter how much he mentions the name.

In the meantime, can we keep the debates cordial?

Lots of name calling on both sides. Can we refrain from typing the word "you", "you are" or "username" in a response? I think that would help a lot. Keep the rebuttals on ideas instead of people.

@sdr thanks for putting out the data.
@dz thanks for being one of the few deflationist.

Submitted by sdrealtor on June 11, 2022 - 2:34pm.

pinkflamingo wrote:
I appreciate both points of views. DZ thinks that there will be deflation. Others think that we'll have inflation and or leveling.

Only time will tell. The Fed's zero interest rate policy took two years for housing prices to get to this level. Here is an example of the insanity https://www.redfin.com/CA/Encinitas/656-...

I'm thinking it will take about the same amount of time for it to go down. With a big if. JPow is not PVolker no matter how much he mentions the name.

In the meantime, can we keep the debates cordial?

Lots of name calling on both sides. Can we refrain from typing the word "you", "you are" or "username" in a response? I think that would help a lot. Keep the rebuttals on ideas instead of people.

@sdr thanks for putting out the data.
@dz thanks for being one of the few deflationist.

What’s insane about that house? Have you ever tried to find a 3000 sq ft one story home that’s turnkey on a nice big view lot with a 3 car garage around here? I’ve been selling real estate for almost 25 years. I have been through hundreds of agent meeting and networking events. I can never remember attending a single one where somebody didn’t raise their hand and say I’m looking for a nice turnkey one story with a view on a nice size lot with a three car garage. Those are unicorns. Did you look at that thinking you might buy it? Good luck finding and buying a house like that in any market good or bad

And if your question is about the difference in price from prior sale? It was sold far below market in an off market probate/trust sale, was a complete disaster and had to be completely rebuilt and remodelled. The house next to it sold for $1.6M in 2015. The house sold this year is completely different than the one last year that was not a normal arms length transaction

Submitted by pinkflamingo on June 11, 2022 - 6:35pm.

More so the price hike from 1M to 3M in less than a year. I wish there were before photos. The remodel looks cosmetic. Hard to judge without before photos.

Submitted by deadzone on June 11, 2022 - 6:42pm.

pinkflamingo wrote:
More so the price hike from 1M to 3M in less than a year. I wish there were before photos. The remodel looks cosmetic. Hard to judge without before photos.

1M to 3M in less than a year? Yeah that's normal, nothing to see here.

I'm only a deflationist in the sense that clearly we are in a bubble created by Fed money printing. If the Fed chooses to tighten, this will certainly pop the bubble and cause a recession just like every other Fed induced bubble in the past (2008, 2000).

Again that is still a big IF. But If they choose to ignore inflation, and continue QE, lord help us there could be civil unrest unlike anyone has ever imagined.

Submitted by deadzone on June 11, 2022 - 6:46pm.

Coronita wrote:
deadzone wrote:
Coronita wrote:

Again, dz, why are you so combative on this minor distinction of whether a vacation home is or is not an "investment"? In the greater scheme of things, vacation homes does not fit your conviction that these are homes that will be sold in a firesale if there is a downturn in housing because they are typically owned by wealthy people who aren't stretched thin and be inclined to sell because a stock market or real estate market

I'm combative? Your are one who is combative, spewing out 1000 word essays in response to every thing I post.

That said, the distinction of vacation home vs. investment is a fine line. The point is, thanks to the Pandemic, folks on the upper end gained extraordinary amount of wealth, as a direct result of the 5 trillion dollars of Fed money printing and government handouts. That is what led to an increased expenditures on vacation homes, Ferraris, etc. during this period. Whether you can classify those 3rd homes as investments or not is debatable. But what is not debatable is the amount of wealth that was generated during Covid and that many of these "wealthy" buying vacation homes were not able to do so prior to Covid.

So looking forward, all of that Fed money printing is now coming home to roost in terms of massive inflation (who could have predicted that?). Fed is pivoting, interest rates going up, asset markets are in the process of crashing, margin calls will result. Much of this recent Covid wealth effect will be vaporized and those 2nd and 3rd vacation homes will be the first to go when the margin calls are hit.

Look dude. You're in an alternative facts reality when you make.baseless statements that are false. Someone corrects your falseness and you end up reaching for corner cases to try to prove you point that you arent wrong. Multiple people have called you out at this point. If you were QA, you'd be the guy that despite things working, you're looking for the one test case that causes a UI formatting issue if you rotate the phone 300 times in a row....and everyone else is like really dude?

Once again you can't help but attack me without addressing anything in my post.

The Fed more than doubling their balance sheet by printing 5 trillion dollars during Covid is not a "corner case". If you can't figure out that this money is the source of all this new found "wealth" you see lately, then you sir are living in the alternate reality.

Submitted by sdrealtor on June 11, 2022 - 6:53pm.

While working on 92129 I found a couple flyhomes transactions. They dont actually close as cash transactions and there is a loan with Flyhomes as the lender and the buyers agent. Debunked that one

Submitted by sdrealtor on June 11, 2022 - 7:04pm.

Here you go teaboy this one was easy.

92129
attached 26 sales 5 were cash

longtime local lives in ZIP and 1st investment property or for family member

Local investor owns 5 other rentals and primary in CV all paid off

Primary owner occ

Investor - high end property
Investor - high end property

The 3 that were most likely investors were wealthy Chinese folks living in CV

Not a big market for investors and some could be buying for extended family but for arguments sake lets call 4 out of 5 investors.

detached 65 sales and 4 were cash

First two were defintely purchased by fix and flip investors at low prices. They will be in and out quickly

Bought by large local church likely as place for clergy to reside

Bought by wealthy local family that had some well covered in the news issues with a family member. This is definitely not an investmemnt as owner is big time investor that would have bought through fund not personally

Bottom line this ZIP is not really one with lots of cash investors and most seems to be CV overflow buying for investment or family.

Nothing really notable here

Submitted by gzz on June 12, 2022 - 11:14am.

“ The Fed more than doubling their balance sheet by printing 5 trillion dollars during Covid is not a "corner case". If you can't figure out that this money is the source of all this new found "wealth" you see lately, then you sir are living in the alternate reality.”

Dz, I think talking about “money printing” is really stupid. It isn’t happening in a literal sense, and it is misleading as a metaphor for what the Fed does.

That said, seems like the right move was to buy hard assets that would be protected from inflation, and finance them with long term fixed rate debt that would be eroded away by inflation.

Submitted by deadzone on June 12, 2022 - 8:27pm.

gzz wrote:
“ The Fed more than doubling their balance sheet by printing 5 trillion dollars during Covid is not a "corner case". If you can't figure out that this money is the source of all this new found "wealth" you see lately, then you sir are living in the alternate reality.”

Dz, I think talking about “money printing” is really stupid. It isn’t happening in a literal sense, and it is misleading as a metaphor for what the Fed does.

Why is Saying the Fed is "printing" stupid or misleading? Obviously money is all electronic nowadays so they are doing the electronic equivalent of printing by creating money out of thin air and expanding the money supply.

Your comment is stupid.

Submitted by sdrealtor on June 13, 2022 - 10:49am.

Just did 92130 and some things here surprised me a little

attached
55 sales of which 12 were all cash

6 were primary residences
6 were investors one of which was an ibuyer that is gonna turn around and sell it

Only 1 of the investors had a Chinese surname and 1 of the primary residences.

Detached
60 sales of which 12 were all cash

Not one showed any indication of being an investor. 6 were clearly primary residences. The other 6 were likely primary residences but 2 or 3 could be second residences.

Only 2 had Chinese surnames both in the defintely primary residence category

The three surprises to me was the same roughly 20% cash buyers Ive seen in other zips so far. The other was dispelling the notion of an influx of cash Chinese buyers as most are Chinese-American residents using financing. The third is the low level of Chinese investors in CV who seem to prefer the lower priced nearby offerings in UTC, MM and PQ from what i am seeing

So far seeing no evidence in the data of what DZ has said. Im seeing wealthy folks fully capable of paying cash making up the cash buyers.

I also saw a couple more Flyhomes buyers. They must be writing contract guaranteeing cash but all are closing with mortages with flyhomes as their lender. Its basically a way of appearing to be stronger as a buyer and using a lender who is probably charging you a higher rate for that privilege. They dont show up as cash sales

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