If you don’t read the Daily Breeze you likely missed this article about how cash buyers are affecting the market in the Beach Cities.. While not a new phenomena in the Beach Cities, the increase in the number of cash sales has had a definite impact on our market. 30% of all home sales in Manhattan Beach were all cash. In Hermosa Beach 33% of home sales were all cash.
As the article notes it is hard for sellers not to accept an all cash offer over one that has a loan contingency. It is hard for a buyer needing a mortgage to compete with someone who doesn’t need a mortgage.
However it is important to remember that not every all cash offer closes escrow. An all cash offer doesn’t necessarily mean a no contingency sale. Cash buyers don’t complete transactions for the same reasons as buyers with less cash…. during the home inspection they find the home needs more work than expected, they have a personal emergency, the source of their funds changes or the terms of the sale can change.
Large numbers of all cash home sales are not just in Manhattan Beach or Hermosa Beach. There were a number of all cash home sales in Redondo Beach and El Segundo. The number of all cash home sales in Redondo Beach was roughly 16% of the home sales since January 1, 2014. Interestingly the number of all cash home sales in El Segundo was also about 16%. While those figures are about half of the numbers in Manhattan and Hermosa, they are still significant.
In small areas like the Beach Cities this means that the competition for the few homes available is tough. Inventory remains lower than normal in the Beach Cities There are a lot of folks who want to live in Manhattan Beach, Hermosa, Redondo or El Segundo.
If you do not have the financial resources to pay all cash you absolutely must have pre-approval from a local lender prior to beginning a home search. Pre-approval means that the lender is ready, willing and able to make you a loan subject only to the appraisal. A local lender is someone who knows this area. Your cousin in Bakersfield is not a local lender.
Have questions about buying a home in the Beach Cities ? Please feel free to call or e-mail me.