Jump to content
House Price Crash Forum
The Masked Tulip

Nearly Half Of Homes Are Purchased In Cash

Recommended Posts

EAs in 2 separate Swansea EA offices have told me that 70% of their sales are cash. They see that as a sign of a healthy and buyoant market.

....or could it be they believe there is nowhere else to put excess surplus cash after spreading it about a bit?...... ;)

Share this post


Link to post
Share on other sites

It would worry me slightly that the only remaining buyers are wealthy cash rich, and everyone else priced out.

Still they can play Monopoly™ with each other, move the shoe and the old car round the board putting hotels up and collecting rent and £200 off the banker.

Of course once that house goes into a portfolio. It won't be traded again for a long time or even ever. The market is slowly eating itself.

Edited by aSecureTenant

Share this post


Link to post
Share on other sites

It would worry me slightly that the only remaining buyers are wealthy cash rich, and everyone else priced out.

Still they can play Monopoly™ with each other, move the shoe and the old car round the board putting hotels up and collecting rent and £200 off the banker.

Of course once that house goes into a portfolio. It won't be traded again for a long time or even ever. The market is slowly eating itself.

Depends on how much margin they're using on elsewhere. When prices turn they made need to liquidate in a hurry.

According to Redfin, based on the US typical 3 bedroom, 2 bathroom, 1600-2000 sq ft home, the median price rose 18.9% year to year in July nationally though some regional markets are much hotter i.e. 39% in Vegas, 38% in Sacramento. Those are bubble metrics which suggest that buyers are buying to flip not hold.

The other side of the story is reduced inventory. Millions of houses have been kept off the market because the respective mortgagors are underwater. As the market rises so too will supply bringing downward pressure to bear on prices again. Any reduction in QE will impact prices negatively, of course.

Manifestly a bubble but like all bubbles it's on borrowed time.

redfinprice.png

Edited by zugzwang

Share this post


Link to post
Share on other sites

It would worry me slightly that the only remaining buyers are wealthy cash rich, and everyone else priced out.

Still they can play Monopoly™ with each other, move the shoe and the old car round the board putting hotels up and collecting rent and £200 off the banker.

Of course once that house goes into a portfolio. It won't be traded again for a long time or even ever. The market is slowly eating itself.

It has been widely discussed there is a boom in BTL in US....Wall Street entities are buying up thousands of properties as rental investments.

None of these will be mortgaged....they do push up prices where this is happening.

Share this post


Link to post
Share on other sites

EAs in 2 separate Swansea EA offices have told me that 70% of their sales are cash. They see that as a sign of a healthy and buyoant market.

you believe an estate agent?

maybe is people refusing to accept 2% invest on their lives savings but are happy with -2% plus taxes

Share this post


Link to post
Share on other sites

EAs in 2 separate Swansea EA offices have told me that 70% of their sales are cash. They see that as a sign of a healthy and buyoant market.

Same in north London. I thought that I was something special being a cash buyer and put an offer in , the EA informed me that all the interested parties were . My offer was laughed out of the office. Strange times ... . Never trust anyone in a pink shirt .

Edited by chicker

Share this post


Link to post
Share on other sites

The cash is of the freshly printed variety. Straight from Bernanke's office and the buyers are huge financial organisations and funds.

Yes, schiff has noted this on his videos. They are counted as cash purely as they arent mortgages, but rather borrowed at a company level.

Still, anecdotally I think a lot of cash rich pensioners or near pension age types are buying a property given their savings have been pillaged.

Share this post


Link to post
Share on other sites
Still, anecdotally I think a lot of cash rich pensioners or near pension age types are buying a property given their savings have been pillaged.

'Cash-rich' pensioners or near pension age thinking their savings have been 'pillaged', so buying another property? One to rent out? One house already, and buying another? Excuse me if I don't exactly feel sorry for them, of all the places to seek yield, with so many younger people totally priced out.

Edited by Venger

Share this post


Link to post
Share on other sites

'Cash-rich' pensioners or near pension age thinking their savings have been 'pillaged', so buying another property? One to rent out? One house already, and buying another? Excuse me if I don't exactly feel sorry for them, of all the places to seek yield, with so many younger people totally priced out.

I have been trying to google the proportion of UK houses bought for cash and so far coming up with a blank, would have thought this information was readily available.

Meanwhile if you are a boomer with a few hundred thousand earning low interest my take is that it is still more valuable than sinking it into a house. A few 100ks in savings earning just under CPI seems preferable to putting it into an over-valued property with probably an even lower yield.

BTL was never about yield but all about the greed of capital gains.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

Meanwhile if you are a boomer with a few hundred thousand earning low interest my take is that it is still more valuable than sinking it into a house. A few 100ks in savings earning just under CPI seems preferable to putting it into an over-valued property with probably an even lower yield.

Just ask Bruce. ;)

Share this post


Link to post
Share on other sites
Meanwhile if you are a boomer with a few hundred thousand earning low interest my take is that it is still more valuable than sinking it into a house. A few 100ks in savings earning just under CPI seems preferable to putting it into an over-valued property with probably an even lower yield.

BTL was never about yield but all about the greed of capital gains.

A lot more valuable in my opinion, given such buyers are then doubly exposed to the housing market.

Younger renters struggling, many under income pressure and fragile job security. The older people buying second properties to rent out to make up for their 'pillaged' savings (!!!) should be downsizing or STRing, rather than buying second homes to rent out.

Can only hope it ends with many such investors losing both the rental home, and their own home. As you say it's been about the greed of capital gains, and the reflation has sucked a lot of stupid money back in also looking for yield and further capital gains.

All these cash transaction sales can't be so good for banks, as they're not profiting from mortgages on them. Might help the illusion of a pick up in transaction numbers for the claims of 'recovery'. Perhaps all these cash-purchases disguises the fact banks are not so comfortable with lending, or not much real buyer demand at current prices from younger buyers.

FTBs pushed further out, increasing in number, as older owners seek to farm them into rentals. Pillaged savings when already own one house full of equity and on the back of decades of HPI, feeling should seek yield with a second property purchase to rent to younger non-owners? Can only see it increasing the impetus for a really big HPC in the end.

(Some cash-buys may involve alternative debt, which also looks like a frenzy set to add to the crash) http://www.reuters.com/article/2013/08/11/us-usa-homes-flips-insight-idUSBRE97A05W20130811

Brzeski is a private money lender running an investment firm in Los Angeles that provides loans to house flippers - investors who buy a home, refurbish it, and sell it at a profit. Many flippers turn to money lenders because they cannot get banks to provide such short-term, quick financing.

Share this post


Link to post
Share on other sites

Same in north London. I thought that I was something special being a cash buyer and put an offer in , the EA informed me that all the interested parties were . My offer was laughed out of the office. Strange times ... . Never trust anyone in a pink shirt .

...If you have an agreed in principle mortgage up to an set figure subject to the survey you are in effect a cash buyer......you don't need to tell the EA anything, tell them to contact your conveyancer if they require further info. ;)

Share this post


Link to post
Share on other sites

I have been trying to google the proportion of UK houses bought for cash and so far coming up with a blank, would have thought this information was readily available.

Meanwhile if you are a boomer with a few hundred thousand earning low interest my take is that it is still more valuable than sinking it into a house. A few 100ks in savings earning just under CPI seems preferable to putting it into an over-valued property with probably an even lower yield.

BTL was never about yield but all about the greed of capital gains.

Cant find anything more recent than this im afraid.

_52299333_property_cash_sales_464gr.gif

Share this post


Link to post
Share on other sites

A lot more valuable in my opinion, given such buyers are then doubly exposed to the housing market.

Younger renters struggling, many under income pressure and fragile job security. The older people buying second properties to rent out to make up for their 'pillaged' savings (!!!) should be downsizing or STRing, rather than buying second homes to rent out.

Can only hope it ends with many such investors losing both the rental home, and their own home. As you say it's been about the greed of capital gains, and the reflation has sucked a lot of stupid money back in also looking for yield and further capital gains.

All these cash transaction sales can't be so good for banks, as they're not profiting from mortgages on them. Might help the illusion of a pick up in transaction numbers for the claims of 'recovery'. Perhaps all these cash-purchases disguises the fact banks are not so comfortable with lending, or not much real buyer demand at current prices from younger buyers.

FTBs pushed further out, increasing in number, as older owners seek to farm them into rentals. Pillaged savings when already own one house full of equity and on the back of decades of HPI, feeling should seek yield with a second property purchase to rent to younger non-owners? Can only see it increasing the impetus for a really big HPC in the end.

(Some cash-buys may involve alternative debt, which also looks like a frenzy set to add to the crash) http://www.reuters.com/article/2013/08/11/us-usa-homes-flips-insight-idUSBRE97A05W20130811

Just a thought...............

............have you not considered that these cash buyers are (like me and mine :( )

..........folk who have sold their un-affordable (due to HPC) house and used whatever equity remains to buy one outright

certainly my plan ( have now accepted an offer on my mint house and am currently "bemused" at the overpriced and knackered shite on sale in north wales :(:o:( )

Share this post


Link to post
Share on other sites

its not that suprising though.

many home owners in their 50's and 60's, who are now one of the biggest demographics, have paid their mortgage off outright.

when moving home they dont need a mortgage, they have 100% cash from the sale of their home.

Edited by mfp123

Share this post


Link to post
Share on other sites

A bit off-topic but: are you allowed to buy a house in gold in this country? I mean, not going to the bullion dealer, selling your gold and using the cash to buy the house, but register the whole transaction in gold ounces.

I must have read somewhere that you can't buy a house in kind. In the continent (Italy, Spain, Germany) you can't buy a house in cash because cash transaction over a certain figure are not allowed.

Share this post


Link to post
Share on other sites

A bit off-topic but: are you allowed to buy a house in gold in this country? I mean, not going to the bullion dealer, selling your gold and using the cash to buy the house, but register the whole transaction in gold ounces.

I must have read somewhere that you can't buy a house in kind. In the continent (Italy, Spain, Germany) you can't buy a house in cash because cash transaction over a certain figure are not allowed.

if it was in a contract i dont see why not.

im pretty sure you can buy a house in cash anywhere, unless you mean actual cash stuffed in a suitcase. that might flag up a few problems.

Share this post


Link to post
Share on other sites

its not that suprising though.

many home owners in their 50's and 60's, who are now one of the biggest demographics, have paid their mortgage off outright.

when moving home they dont need a mortgage, they have 100% cash from the sale of their home.

In that case it might be a wise idea to have a small mortgage....you don't want to be tying all your cash up in property. ;)

Share this post


Link to post
Share on other sites

Just a thought...............

............have you not considered that these cash buyers are (like me and mine :( )

..........folk who have sold their un-affordable (due to HPC) house and used whatever equity remains to buy one outright

No I had not. A few points made on the thread I had not considered. I hope the decision you've taken puts you in a more secure position for the long run.

Future downsizers, looking to protect their financial position or just cash in, will need upsizers to buy their homes. QE and other policies helping with that for now, but perhaps some would-be downsizers will regret not cashing in sooner. Leaving it too late, especially if circumstances come together for a rush of sellers if we have one of many possible triggers to cause a market change.

Some interesting info/data/charts here in the latest DrHousingBubble blog + the comments area:

The investor trade is crowded: Median price for homes purchased with cash financing reaches highest level ever.

Investor demand for housing is largely responsible for the feeding frenzy in real estate over the last couple of years. Yet this unrelenting demand is unsustainable and it looks like cracks are forming in the investor trade. First, the median price paid by those using “cash” financing has reached an all-time peak. Not a revisit of an old peak but a brand new one. Of course this is happening while the typical US household has seen stagnant wage growth. Most understand this yet manias lure people in at the most inopportune times. A few other pieces of evidence are highlighting a tipping point in the market. Inventory is starting to increase and new home sales remain incredibly anemic. The refinancing boom is now being shuttered because of rising rates (as if a 30-year mortgage going for 4.6% is somehow apocalyptic). The investor trade is crowded and we’ve seen data showing how large the investor share of the market is in 2013.

A new peak for those cash buyers

For definition purposes, those categorized as “cash” buyers are those that do not use conventional financing. There has never been a market so dominated by non-conventional financing as the one we are seeing today. And those using this new way of financing home purchases are willing to pay record prices for homes:

continues.. http://www.doctorhousingbubble.com/investor-trade-crowded-cash-trade-peak-price-in-investor-median-home-price/

I'd take a rent price crash too, in HPC.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.