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From the WSJ via Calculated Risk – an excerpt on cash buyers:

Residential real estate has been slower to bounce back than stocks, but the presence of apparent bargains is luring in newly confident buyers.

Richard Stoker, a retired sales executive, recently plunked down cash for two condominiums in Miami Beach, and plans to close on one more in coming days. He loves the complex’s ocean views, four swimming pools and activities such as yoga and Pilates.

But what also motivated the purchase, said the 73-year-old, was that “the prices were just irresistible. Florida’s been hit pretty hard.” To pay the $1.8 million, $1.2 million and $1 million prices on the condos, Mr. Stoker and his wife, Jane, cashed out of some financial investments and sold a Roy Lichtenstein painting and an Alexander Calder mobile.

Mr. Stoker could have taken out mortgages, but decided to pay cash. “It was a good time to lighten up in the art market and take on real estate at a favorable price,” he said.

The Stokers have a home in Potomac, Md., but spend most of the year in Florida. Mr. Stoker doesn’t plan to rent out any of his new properties, saying he and his wife will live in one with two dogs, his son might live in another and the third will house an older dog and guests.

The harder a market has been hit, say economists, the higher the percentage of cash deals. Last summer, piano teacher Virginia Hall-Busch told a real-estate agent she met through the Rotary Club to keep her posted on deals on historic houses in Stone Mountain, Ga.

A few days later, Ms. Hall-Busch, 62, got a call about a 1918 bungalow with three bedrooms and one bathroom listed for “short sale,” which in the real-estate world means at a price lower than what’s owed on it. The home had been on the market for $159,000, then dropped to $129,000 and then to $79,900.

“I offered them 50,” she said. “I figured, it wasn’t like I needed a place to live. I can afford to be a little cocky here.”

Ms. Hall-Busch closed in October for $52,500 and began renovations within weeks.

“When you have a bad economy, it’s hard on lots of people,” she said. “But right now if you’ve got the money to put down on a house, long term it’s going to be good thing.”

It gets mentioned regularly how the demographics don’t support the housing prices around here.  It makes you wonder, how can so many expensive homes keep selling when the San Diego median income is around $60,000 – doesn’t something have to give?

We’ve seen it consistently over the last year or two – buyers are utilizing bigger down payments to keep the monthly payments down.

Here’s how the SFRs that sold in October were financed in three mid-range areas of the North SD County Coastal region - from the tax rolls:

Sixty percent of the buyers used at least a 30% down payment, and only 6 FHA deals.  It lends more credence to the haves vs. havenots theory – those with ample firepower are buying, with many paying quite a bit more than those who may qualify, but are more frugal.

The three low-down sales in Carmel Valley (2 FHA, one 100% fin) were all at Manzanita Trail. Not surprised to hear that the new-tract lender is finding every available opportunity to assist with sales. 

More review of the 101 SFR sales between June 1st and August 17, 2010, in 92130. 

These are from the tax rolls, and include new-home sales, FSBOs, and deals not on the MLS:

1. There were 28 of the 101 that sold for less than they paid, at an average drop of 12%.
2. Five of the 28 sold for a loss of at least 20% or greater. (73 sold for more than they paid)
3. There were nine new Pardee homes sold, between $764,000 and $805,000 (only one on MLS).
4. There were 92 sales on the MLS, plus the one dirty deal on Winstanley.
5. There were 8 short sales, 2 REO listings sold, and one flipper – Adam!

Here’s how the buyers financed their purchases:

Over 90% invested at least 20% down, and 58% used a down payment of at least 30%. 

For those homebuyers looking to purchase in an area that has a lower threat of foreclosures in the future, Carmel Valley is about as safe as it gets – at least on the surface.  These buyers must have felt pretty comfortable with their personal financial situation to invest as much as they did, and it’s been the trend that we have seen lately in the CV!

The Spring Kick statistics for North SD County’s Coastal region are likely to be tepid, at best, over the next few months, just because of the low inventory - the quality buys are hard to come by.

But if there was an area that could continue to beat the odds, it’s 92130.

I think most of us figured that Carmel Valley would be at $300/sf by now, but all four of these stats are holding up – why? The strength of the buyer pool is phenomenal, and the amount of cash is mind-boggling. Here are the down payments of the Carmel Valley SFRs closed this year (1/1-2/22):

It’s been like this for months, 77.5% of the buyers have at least 25% down, and 35% used more than 50% down payments. Two thoughts: We’re probably not going to see cascading defaults of recent buyers in the future, when they have invested so much down-payment. Their payments are lower (though not low), and they must feel comfortable with their finances to invest so much up front – they must intend to stay a while. Secondly, we should grapple with the likelihood that real estate in the area has turned into a rich-man’s game….only. We know that homeownership isn’t for everyone, but if these trends continue, buying a house will just be for the elite, at least in 92130.

Are the sellers having to take big hits to sell?  From the tax rolls, here are the same-house-sales data; the amount of price change between the last sale and the most recent (between Jan.1 – Feb. 22):

2002 and before:
+144%,+138%,+113%,+102%,+99%,+83%,+80%,+47%,+34%,+20%,+14% (REO)
2003:
+33%,+28%,+19%,+14%,-4% (REO)
2004:
+9%,+7%,+7%
2005:
-10%, -17% (REO)
2006:
+2%,-4%,-11%,-11%,-12%,-13%,-20%
2007:
+8%,-5%,-12%,-13%,-20% (REO),-22%
2008:
0,-2%,-4%

Will there be enough peak-buyers that either can’t afford their payments, or bail out due to being underwater that we’ll see a significant change in the trend? I think it would have happened by now, but if it’s still coming, we should see more signs in the next few months.

An indicator to watch is the amount of new listings coming on the market. This month isn’t over, but here are the number of February detached listings from 2001 to 2010:

85,70,81,63,70,79,75,73,73,and 69 so far this month.

Levitating, or just beating the odds – either way, it;’s been impressive in Carmel Valley!

The type and method of financing should indicate something about the buyers’ intentions – if they are putting down a boatload of money, they’re probably planning to stay a while. As we’ve seen all year, the big down payments are the preference in North SD County Coastal.

Here’s a check of the last 100 SFR sales in Carlsbad, Encinitas, Cardiff, Solana Beach, Del Mar, and Carmel Valley (omitting RSF and LJ) that occured between November 12th and December 1st:

DOWN PAYMENT AMOUNTS:

0-5%:  12

6-19%:  6

20%:  23

25%:  10

30%:  10

40+%: 26

Cash:  13

Total: 100

Eighty-two percent of the buyers used at least a 20% down, and nearly half (49%) used a down payment of 30% or more.

LOAN TYPES:

VA: 1

FHA:  11

Conv:  75

Cash:  13

You can’t say the govies are carrying the SD North County Coastal market.

OWNER-OCCUPIED vs. NON-OWNER

O/O:  75

N/O/O – local:  18

N/O/O – out of state:  7

Based on their mailing address on the tax rolls.

SELLERS SOLD FOR MORE OR LESS THAN THEY PAID

More: 70

Less:  30

The average drop in price for the 30 who sold for less was $144,000, after throwing out the high and low number.

OF THE 30 THAT LOST, YEAR PURCHASED:

2004:  4

2005:  16

2006:  5

2007:  3

2008:  2

You can’t really say we’re back to 2003 prices currently.

TYPE OF SALE

REO:  9

SS:  11

Reg:  80

It’ll be interesting to see how these split this time next year!