(Image: Redfin with permission to CHS)
CHS recently reported on the the sharp rise of all-cash home buyers in the Seattle housing market with some good indicators that the same trend was happening on Capitol Hill. Now we have some data to prove it.
The number of all-cash home buyers on Capitol Hill jumped by 26% in 2013, according to a report from the real estate brokerage firm Redfin. All-cash buyers represented about one third of all home sales on Capitol Hill in 2013.
All-cash home sales are even more prevalent on First Hill, where 42% of all sales were done with non-financed buyers. That’s a sharp increase from 2011 where all-cash transactions represented around 26% of sales.
Since 2008 all-cash buyers have doubled citywide to make up 20% of all sales, according to a report from Polaris Pacific (PDF). Cash buyers are “generally from opportunistic investors and not from trade-up buyers or first-time buyers,” said the report.
Experts have told CHS the rise in all-cash buyers is the result of foreign investors seeking to park money in a safe economy as well as people continuing to search for good real estate investments in the post-housing bubble market.
Wow, that’s disturbing. Is this is an indicator of super-rich people buying out a bunch of properties to use as rental properties? If so, they COULD drive rents down (by charging only enough to break even on property taxes, maintenance costs, and a minimal ROI) but in practice they’re probably going to continue to charge market rates.
It’s foreign investors looking for safe places to park their money. Real estate in a relatively stable market like Seattle is a good bet. My friend in Vancouver was telling me that Chinese buyers are buying whole floors of new condo buildings sight unseen, and just leaving them empty. They just need a safe place to park the money.
Even the new tower going up in Belltown, there’s a reason they have a link to their fact sheet in Chinese (and no other foreign language) right at the bottom of the page.
http://www.insigniabybosa.com/pdf/INSIGNIA_Chinese_OneSheeterFactSheetHR.pdf
I doubt it’ll drive rents down, at least not by flooding the market with cheap rent. If anything the buyer will pay a property management company to rent it since they don’t live in the US. The property management company gets a percent cut of the monthly rent, so they’re incentivized to rent it at its maximum market value.
Get ready Seattle. You’re officially on your way to become as expensive as San Fran, Vancouver and New York.
I smell bullshit. I know of several people who bought houses and condos by taking a loan against their 401k and/or using non-realestate-mortgage financing. This would show up as a “cash sale”.
http://www.polarispacific.com/wp-content/uploads/2014/05/SE-May-2014.pdf
Look at the rates of absentee buyers and how it mirrors the cash sales.
I love your anecdotal information, but its bullshit.
Speculation is most likely to happen is depressed markets where prices are lower. I believe that has been happening more in parts of Southeast Seattle and West Seattle. Condos may continue to be an unappreciated market in Capitol Hill and may attract some speculation as well. I have a very difficult time believing that the single family home market in Capitol Hill is being bought by speculators. A few more details and underlying documentation would be welcome here. Mark Atwood may have a good point as the mortgage providers tend to be less friendly to the condo market.