By now, we all know the stories of the major hedge-fund investors (cough, cough, Blackstone, cough) coming into the Sacramento Real Estate market and basically buying up everything they could at the end of 2012 and beginning of 2013. Since the third quarter of 2013, the amount of cash sales has begun to decrease nearly each month and is slowly returning to "normal" levels.
From my calculations, the amount of cash sales in Sacramento County for June 2014 is about 17.7% of all the sales. Last month they were around 20.5%.
So what does this mean??
It's good news for the first time home buyer. As inventory has slowly been increasing this year, the level of cash buyer competition has been decreasing. That makes it a little easier for FHA buyers and just buyers that need to use financing in general. Why are there less cash buyers??? Well, prices have gone up significantly since the beginning of 2012. With higher prices brings lower returns on their investments. There are still areas that are having heavy cash investor influences still (Most homes in Elk Grove below $300k are still getting multiple cash offers) but for the most part, the cash buyers are sprinkled throughout the market.
I expect the overall volume of cash purchase to continue to decrease as we go through 2014 and probably reach a level of about 10% of sales at some point.
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