Cash Payment on Hollywood Hills Homes
Nearly one third of all Hollywood Hills homes were paid for with cash this year. That mirrors the cash purchase trend in all of Los Angeles real estate.
In fact, across the nation, cash is king when it comes to home sales. So far this year, 49% of all home buyers nationwide
purchased their houses with cash. That’s up significantly from last year, when 30% of all homes were paid for with cash.
Why is cash suddenly so popular?
There are a number of reasons. Mortgage lenders have strict criteria, making it hard to borrow money for loans. Many people sat on the sidelines during the housing bust and saved their money, so they have cash available. Homes in Hollywood Hills are still priced at a bargain right now, compared to before the bust. In addition, there is an influx of both local and foreign investors, as well as institutional buyers, that are backed by cash and view Los Angeles as a bargain compared to their country’s more expensive real estate prices. Of my own personal clients purchasing Los Angeles homes for sale this year 40% have been foreign investors.
This situation creates a problem for the first time home buyer, who may not have enough cash saved. They can’t compete with investors and seasoned buyers that can pay more than the asking price and waive an appraisal.
However, there is an upside for the real estate market. All these cash sales are raising Hollywood Hills real estate prices. Home prices in the area are the highest they’ve been in the past five years and are expected to keep rising, especially in the trendy Hollywood Hills neighborhoods of Doheny Estates and “The Bird Streets” that have actually exceeded the 2006 market peek prices.
The cash purchase trend is expected to continue in this beautiful, sunny and internationally recognized destination. As mortgage rates rise, forcing some buyers to the sidelines again, cash investors should help keep the Hollywood Hills housing market strong.
To read the article, please click here.
Susan Andrews | Estates Director
BRE License #01425843
Susan Andrews is your ultimate real estate source for Los Angeles, California and surrounding communities.
Photo courtesy of 401(K) 2013/Flickr.com