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Old 05-09-2014, 09:53 AM   #21
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Originally Posted by robnplunder View Post
A Chinese-American friend of mine asserts that rich people in China are buying up real estate in US, always with cash
There is apparently a similar dynamic driving real estate in south florida - people from south and central america moving money into a safe haven and paying for condos with cash.
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43% of 1Q 2014 home buyers paid cash
Old 05-10-2014, 10:36 AM   #22
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43% of 1Q 2014 home buyers paid cash

Just scanned the responses, so forgive me if this is a repeat, but I would bet that most of that 43% is not individuals, but Wall Street investment funds. Billions have been pooled to buy rentals in depressed markets (Phoenix and Las Vegas come to mind).

http://www.forbes.com/sites/morganbr...le-on-the-way/
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Old 05-10-2014, 12:01 PM   #23
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Cash sales are high, but I think some of the data reported in the Marketwatch article is bad.

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All-cash purchases accounted for almost 43% of all sales of residential property in the first quarter of 2014, up from almost 38% in the previous quarter and 19% in the first quarter of 2013, according to data released Thursday from real-estate data firm RealtyTrac.
The blog Calculated Risk reports weekly on housing and is a treasure trove of data and analysis. Their latest update on cash and distressed sales (here) shows cash sales are more than 40% of the total in Florida and Nevada but elsewhere are lower, so total cash sales in the US are likely to be in the 35% - 40% range. The data shows it has been declining steadily for over 2 years, so the comment "up from almost 38% in the previous quarter" is suspect and I believe the last time it was 19% was in the early part of last decade ('00 - '04).
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Old 05-10-2014, 02:16 PM   #24
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Hedge funds have been big buyers as well.
Right, they will lever things up but not secured to the individual properties. Would probably register as cash buyers.

Not sure how foreclosures would be registered. It is considered a sale by the owner to the bank. Might be excluded.
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Old 05-11-2014, 12:07 AM   #25
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US still has a soft economy. I'd wager that household formation is low too. Marriiages relative low with our children. Low birthrates among US citizens.
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Old 05-11-2014, 11:45 AM   #26
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I'm sure that will end well.

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Hedge funds have been big buyers as well.
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Old 05-11-2014, 11:57 AM   #27
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The hedge funds haven't been heavy buyers since the market turned in 2012. The small investor buying has slowed down in many markets as prices and interest rates have gone up. Foreclosures are down everywhere, dramatically in the worst hit markets.

Here in California, we have a lot of overseas buyers that pay cash. Also, a lot of cash is funneled in from overseas through family that lives here. They are buying for cash as well. In Florida, you have a lot of South American buyers stashing cash. These folks are hedging against current or future problems in their home countries.

We are probably starting to see some baby boomers move and/or downsize. Lots of them own their properties outright or have lots of equity. They often buy for cash to avoid having a mortgage in retirement.

Finally, sales are declining overall in most markets. For most buyers, a mortgage is necessary. Financing is still difficult to obtain, as lending requirements have not eased much. Fewer financed buyers mean more cash sales.

It's not surprising to see the high percentage of cash buyers, given these factors.
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Old 05-11-2014, 12:19 PM   #28
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We sold our old house in January to a foreign buyer who will turn it into a rental. It sold in one day and was all cash. That seems to be the trend here north of Houston where the real estate market is hot.

It was 2,000 square feet and built in 1984. Most homes of that vintage are being bought by foreigners and turned into rentals here.
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Old 05-11-2014, 12:57 PM   #29
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Last flip I did was cash buy and cash sell .... did carry paper on 1/3 of the price. But no banks involved. Had 3 full price offers fail to get approved by the stingy banks. The bankers don't realize the problems they create!
How about the problems created by lending to buyers who can't make the payments and default on their mortgage? Ha is right, they don't want the problem to become theirs. If you don't want the problem to be yours as a seller, require that your potential buyer be pre-qualified.
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Old 05-11-2014, 05:22 PM   #30
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require that your potential buyer be pre-qualified.
... THAT's the funniest part .... they WERE pre-qualified.

Pre-qual is a joke. It just means they sat with someone for 15 minutes and walked with a form letter. Once again, the stink is on the banks.

As said earlier, Fannie and Freddie have swung the pendulum TOO far to the opposite side. All three rejections were to first time home buyers ... now the economy suffers (via stagnant $$).
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Old 05-12-2014, 01:39 AM   #31
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This winter we put in a full cash offer at the asking price for our "dream" home in So. AZ the first day it came on the market. Turned out that there were four other cash offers that same day at the asking price cept for one that offered $5K more. Our realtor did not suggest an escalation clause and we were not aware of one. My wife still cries about our loss.
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Old 05-12-2014, 05:47 AM   #32
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Following article mentions the Blackstone Group purchasing distressed homes at rate of $140M per week last summer, but only $35M per week recently.

Blackstone Backs Out Of Delinquent Mortgages http://seekingalpha.com/article/2206293?source=ansh
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Old 05-12-2014, 10:49 AM   #33
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Following article mentions the Blackstone Group purchasing distressed homes at rate of $140M per week last summer, but only $35M per week recently.

Blackstone Backs Out Of Delinquent Mortgages Blackstone Backs Out Of Delinquent Mortgages (BX) | Seeking Alpha
So that explains why I am a big loser on BX.
So, Do I buy down or cut losses? [ I really do own this, and unfortunately in an IRA trading account].
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Old 05-12-2014, 04:04 PM   #34
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Statistics like this make me wonder how much of a recovery we really have had. If you believe the financial statistics, most people in the US don't even have an extra month's worth of income put away... So, I doubt a lot of these cash purchases are being made by the middle/lower class.

In my opinion there is no recovery until the middle/lower classes recover.
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Old 05-12-2014, 04:22 PM   #35
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Hmm, must depend on the area you live in. Around here, in SoCal and I've posted this before, there's no recovery needed. Most of the cars are Mercedes, BMWs, the ones that aren't are still no older than 5-6 years. Even the neighborhood gardner's family vehicle (Cadillac Escalade) is more expensive than mine. The Restaurants and Starbucks have long lines and everyone and their grandma have their hands in some online/hi-tech business, cpa firm, law firm, dr office, or a small business - minus the younger kids that are working at these places for min wages. Many people I come across here are probably millionaires without them ever having to work too hard at savings.

Here was a similar article: All-cash deals account for nearly half of all home sales - May. 8, 2014

If you read the last line, keep in mind Irvine is one of the most expensive cities to live in.
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Old 05-12-2014, 06:52 PM   #36
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The 43% stat is to me just further evidence that the fed is pushing on a rope with these low interest rate policies.

I'm over-stating it for effect, but the bottom line is that everyone who can qualify for debt already has cash and doesn't want debt; and anyone who wants debt can't qualify for it.

All this low rate stuff is doing, IMHO, is fueling asset prices be they bonds, preferred securities, etc. as those of us trying to save and build a future seek out yield. It's just setting up the next great day of reckoning because crappy yields really suggest that we're all accepting poor compensation for the underlying risks in these investments.

More fuel for the fire that it's time to let rates go higher. Perversely, I think that would actually increase borrowing. Right now, I think a lot of people are looking at 0% return on cash and figuring they'd rather just avoid the debt and deploy the cash. Give them yield -- even a hope of yield -- on their cash and ironically they would start to borrow more. I think the psychology trumps the math in this circumstance.

Or maybe I'm just really tired of crappy yields and am looking to self-justify my behavior ;-)
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Old 05-13-2014, 03:29 AM   #37
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All 4 of the places I purchased in Vegas in 2011/2012 were considered cash purchases. In reality only the first one was. The others I used a HELOC. In a tight real estate market cash buyers definitely get a preference.
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Old 05-14-2014, 04:05 PM   #38
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Following article mentions the Blackstone Group purchasing distressed homes at rate of $140M per week last summer, but only $35M per week recently.

Blackstone Backs Out Of Delinquent Mortgages Blackstone Backs Out Of Delinquent Mortgages (BX) | Seeking Alpha
In NL right now there is a bankrupt real estate corporation selling off 6.000 homes in one auction. Apparently quite a few hedge funds and private equity funds are in the bidding process. Mostly since it is really hard to buy and sell retail homes in bulk.

Not really all cash types of deals, these funds strictly deal with other people's money: "Heads I win, tails you lose"
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Old 05-14-2014, 07:16 PM   #39
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In NL right now there is a bankrupt real estate corporation selling off 6.000 homes in one auction. Apparently quite a few hedge funds and private equity funds are in the bidding process. Mostly since it is really hard to buy and sell retail homes in bulk.

Not really all cash types of deals, these funds strictly deal with other people's money: "Heads I win, tails you lose"
And NL is where?
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Old 05-14-2014, 07:20 PM   #40
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My guess:
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.nl is the Internet country code top-level domain (ccTLD) for the Netherlands...
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