All-cash home buyers big players in Capitol Hill real estate market

All-cash home buyers have been a force in the Capitol Hill and Central District real estate markets, too, but prices are now so inflated, even these flush buyers have begun to back off.

If you’ve been looking to buy a home or condo recently, you know the spirit crushing force all-cash buyers bring to the market. Well heeled investors that swoop up homes from financed buyers by promising sellers quick and easy transactions. Over the past decade all-cash transactions have represented an increasingly large share of home sales in Seattle.

Since 2008 all-cash buyers have doubled in Seattle to make up 20% of all sales, according to analysts at Polaris Pacific (PDF). Cash buyers are “generally from opportunistic investors and not from trade-up buyers or first-time buyers,” said the report.

Windemere real estate agent George Beasly focuses on Capitol Hill properties and said nearly a third of this clients today are all-cash buyers looking for reliable investments. “What else are you going to do with your money?” he said.

Screen Shot 2014-07-02 at 12.00.47 PM

All-cash buyers have doubled in Seattle (Image: Polaris Pacific)

Beasly, who runs the site, said he’s seen a big uptick in the number of all-cash buyers in recent years, particularly among wealthy foreign buyers who are are often looking to park money in a safer economy. Beasly said international buyers will frequently move their children into homes while they attend college.

However, in 2014 there’s been a slight dip in all-cash and “absentee buyers” with increasingly fewer “steals” to be found on the market. The cooling off of investor buyers could mean less competition for families and first time buyers, but prices on Capitol Hill are still well out of reach for many currently living in the neighborhood.

Last year CHS wrote about Capitol Hill’s competitive, cash-is-king condo market as new condo construction has slowed to a trickle amid Capitol Hill’s apartment boom. Overall housing prices also continue to outpace incomes in central Seattle.

Accoring to Trulia, the median home price in Central District/Capitol Hill’s 98122 area code was $492,000 — well out of reach for many in the area, where the median household income in 2013 was $47,405. On that income, the most expensive “affordable” house (30% of income) would be around $294,500.

The cost of living in the area, of course, isn’t any better for renters. Last month CHS wrote about rents that continue to soar on Capitol Hill, as average rents recently reached $1,557 a month, up $162 from the same time last year. Meanwhile the City Council has delayed the roll-out of its affordable housing plan, which is now expected to go before the council early next year.

Above: The old Comet’s ceiling — also all-cash

Subscribe and support CHS Contributors -- $1/$5/$10 per month

15 thoughts on “All-cash home buyers big players in Capitol Hill real estate market

  1. Puts the lie to claims that the rising home prices of late signal generally improving economic conditions. Nope, just “well heeled investors” gambling on real estate, thereby helping to put home ownership out of the reach of working Americans. Oh, and driving up rents in the bargain. Fuckers. But every bubble bursts eventually.

      • The econocataclysm of 2008 was a “mini crash”? One more mini crash like that and we’re back to the barter system.

        “How many goats you want for that house?”

  2. Discouraging news for anyone trying to buy. I’ve been following sales on Redfin and see how quickly homes are selling, over asking and in a few days in many cases. Then seeing homes sold for 400k a couple years ago now on the market for 600k+. With such rapid appreciation, I wonder how long it can sustain. I expect we’ll see more condos come online as these new apartment developments convert to condos in a few years. Hopefully that helps some.

  3. I lost out on a condo bid in Fremont to an all-cash buyer last summer. At least in that case, the buyer actually moved into the unit. Still pretty disheartening when you’re trying to buy your first home and you’re running up against investors with resources you can’t hope to match.

  4. There ought to be some regulation in place – either in preferential treatment/prioritization or out right limitation on allowing foreign investors or corporations to just “park” their money on properties here – people in the community that want to stay in the community and can prove the means to do that within reasonable extend should get first try at available properties.. it just really sucks for those of us who make enough and can get a loan for a home but then are completely pushed out by egregiously wealthy non-present entities. I know I know…its a pipe dream, capitalism rules – and crushes all.

    • This is something that people like myself (home/condo owners on the Hill) can take to heart when selling. The personal is political. As the seller, I get to choose who I would sell to.

      • I agree with this – although the sums being offered now are so exorbitant that I can understand why someone goes with the insane cash grab to an investor or developer. Hate it, but I can understand it.

  5. House/lot prices have changed, but cash buyers were our bane over 30 years ago as well when we were looking for a home. Those buyers were coming up from California with lots of cash. We lost a house we really liked to such buyers because the older couple selling the place reasonably took the cash (they did say that they thought long and hard on the choice, which was something, seeing as they were in their 60s and we were 30+ years younger and two women).

    So, we had that problem of buying as a s/s couple and interest rates that ran from 12% to 16+%.* Finally, we bought on a private sale, on a street block that was over half rental units, from a seller who worked in the local community and was willing to take a chance on our “stability.” We were lucky; we had some cash from my mother’s estate to pay the 20%-down payment that went with private sales, and 2 incomes, which helped with the mortgage payments.

    We certainly couldn’t have afforded to buy the house had we tried during the tech boom of the 90s. It still wasn’t until 1998 that we got the interest rate down to a single digit from a credit union that had changed its policy re: s/s couples. Our lot is all that’s worth $ now — not the house; it’s a throw-away acc. to appraisals — and we still couldn’t buy it nowadays.

    *I wish more people remembered what the 80s were really like for ordinary workers. The lay-offs that are so familiar with now began in 1981, and those interest rates were killers, esp. when pay raises began to disappear. The economic realities that everyone deals with today are the consequences of those 1980s policies. We were very lucky to find a buyer to sell to two women (at a low, low 12% interest), and…well, if mom hadn’t died too young at 61, we sure wouldn’t have been able to buy a house on the Hill, no matter luck.

  6. I lost two condos I really wanted to all cash buyers. I don’t know any specifics on the buyers, but it’s a total let down to be so set on something and then lose it because you don’t have $200k sitting in a bank account.

    I finally got my place on my 4th try. Very happy with it now, but the buying process took about 7 months longer than I thought it would.

    One of the bigger problems, at least in the condo market, is there really isn’t a lot out there. You get the ‘crap’ that’s been listed for 9 months or longer. And then there’s the good stuff that sells in less than 4 days. You have to be armed and ready the day you see it with an offer.

  7. Ditto what sameboat says – in this market, you really need to be ready to hit “GO” – up to date credit report, mortgage pre-approval, pre-inspect the house/condo, have extra cash in cash you need to up your offer, etc.

    The other thing to keep in mind is that tech has changed Seattle – this isn’t the town that Boeing built anymore. Its quickly becoming like what the coastal markets in California (SF, Sili Valley, LA, etc) have been for decades – very expensive places to buy a house or condo, and pretty un-affordable to working class & middle class homebuyers unless you buy a house/condo that is a long commute from the jobs core. Those California homebuyers everyone in Seattle loved to hate in the 80s/90s were often just regular Joes priced out of California moving to where their dollar went farther.

    To buy a condo or house in Seattle is like what it takes to buy a condo in SF (or, these days, more realistically, buy a condo in Oakland or South Bay) – you need to keep your credit squeaky clean. You need to keep squirreling away money and build that nest egg. And then you need to ride out the boom-bust cycle – during the boom, you need to just wait and wait and wait and wait. Then when that downturn blip window happens & the balloon bursts and the Fed lowers rates, that’s when you pounce and go all-in. Even if your own personal financial situation is feeling a little precarious. Then you hold on for dear life and let the inevitable next boom pull you up.

    If you are just now starting to look at buying a condo/townhome on the Hill, you are too probably too late. If you are set on the Hill, you’ll likely need to just double down on saving money and then wait until the next recession comes along to buy.

  8. Does anyone remember late 90s dot com boom…and bust? Same thing then. Tried for one year to find Cap Hill house , making numerous strong offers along the way, only to be blown out of the water by dot-com stock option twenty-somethings writing full offer check off their portfolio. Frustrating, but we finally landed a great house, over asking price using guile and dollars.

    Just two years later buyers were gone in the bust and prices dropped. Happens every ten years. Just be prepared to buy the dip.

  9. Pingback: Capitol Hill’s Bordeaux Mansion goes on and off market in three days | CHS Capitol Hill Seattle