Will Las Vegas Cash Buyers Pull Us Out of the Weeds?

One of my Realtor friend's son is purchasing a bank owned property out there!   He got a pretty good deal, he thinks!

Renee - Are you seeing the source of the money used for cash purchases?  I've been doing mostly cash sales on my listings for the past year and it's been interesting to see where the money is coming from.  With the China real estate bubble predicted to burst soon, much seems to come from the Far East.

Cash is King here in Phoenix real estate market.

I sure hope you're right (and it seems like you very well may be)!!!!! Our market here never took a HUGE blow like other markets did so I think it's a little more difficult to recognize clear signs of improvement. We tend to have around 15-20% cash purchases each month and that never changed. Prices appear to have stabilized, and # of sales has increased compared to last year....I think the remainder of this year will be telling!

That's a substantial increase in cash buyers, to say the least. It sounds like you are cautiously optimistic about the market, based on your research and first hand knowledge.

That is a huge percentage of cash transactions!  Ours this year is 23% so far which almost half your rate.  I'm going to guess that your housing prices are lower than here though, where cash can go much further.

Renee - While I haven't run the numbers like you have, I would venture to say that LA & Ventura county are probably not too far behind Vegas.  I just read recently that Ventura county was #5 in the country for negative equity and I'm seeing so many strategic defaults that it's absolutely insane. 

However, what I'm also hearing a little about (which could get worse next year) is that those cash buyers are turning around as soon as allowed to cash-out so they can buy more property.  Another scenario that I hope doesn't become a trend are the o/o who are cashing out life savings to purchase a primary residence. 

Last year, I had two buyers that becamse so frustrated with the way they were being treated by LA's and their bank sellers because they were financed buyers, that they eventually cashed-out their life savings (401k, IRA, stocks, munis, etc...) just so that they could buy something all and/or mostly cash.  Their plan: to double up on their retirement contributions (since they had no mortgage to pay) and do a cash out refi as soon as they had enough seasoning.

While I don't promote and/or encourage this plan for the o/o looking to buy a primary, these buyers were tired of being beat out by cash buyers time after time after time after time...  Furthermore, they were also tired of being treated like second (or third in some cases) class buyers by LA's who were looking for the quick and easy sale of a cash buyer.

Anyway, my rant is over.  While I do understand the cash investors who are loving this market because they are able to expand their real estate holding portfolios, it certainly doesn't help the o/o looking to purchase a primary residence, someone who actually wants to live in the property, which will do so much more for the community than a bunch of rentals filled with transient tenants.  JMHO

If I had the money I would invest in Vegas real estate.  Great newer homes priced very well in an area that will come back.

Renee,

Cash buyers are great on the demand side, cutting into that high inventory. On the other hand, they are mostly investors who turn the acquisitions into rentals that will dilute ownership in many subdivisions.

I sure hope you are right as you, Calif and Florida are all the forefront it seems for the rest of us:)

Renee - Yes, the cash buyer's have definitely showed up in Las Vegas NV, I'm jealous every time I read your reports about types of funds.

hahahaha about the ham sandwich.  I recently pulled up a short sale that was purchased in 2008 and honestly couldn't believe it, 2006 I can see, 2007 I can see that too, but 2008....really?

Great to see buyers finally stepping up to the plate.  if vegas can get above water things should improve for everyone.