In 2012 and 2013, Santa Clara County saw many single family homes selling for all cash, no loans. The peak may have been in March 2012, when the percentage of all cash sales was a whopping 25%. That was the beginning of a long housing boom, and today the percentage of all cash sales in Santa Clara County has settled down significantly, though it is still in double digits in most months.
Today I crunched the numbers on MLSListings.com (first pulling the number of sales per month, then the number of cash sales, and after exporting the data to excel, did the math to get the percentages). The chart below reflects the sales of homes sold with all cash, no loans in Santa Clara County among houses and duet homes, which combined are known as single family homes. (Duet homes are not the same as duplexes.)
All cash sales, month by month, in Santa Clara County (single family homes)
The data from one month alone does not make a trend. Please note that in the percentage of all cash sales, above, we had under 9% in April 2020, but then it did bounce back up into double digits until October. It may well do that in November, too, once we have cleared the election jitters period.
What does the lower percentage of cash sales mean? In Santa Clara County, we saw a declining number of pending sales in October. I believe that together, these point to less buyer confidence, or perhaps more buyer fatigue.
Here’s that chart (posted recently in my newsletter and also in the Santa Clara County market post on this site):
During the early part of the downturn, the percentage of all cash buyers was not only in single digits, but for the couple of windows I pulled up, it was in the 3% to 4% range (spring 2006 and spring 2007).
This is a data point to watch.
For home sellers, it may suggest that conditions are not as strong as in recent months for selling. For buyers, it may imply that conditions are better for writing offers closer to list price and for keeping all of your contingencies. We’ll need to chart other numbers, too, such as the average sales to list price, the absorption rate, etc.
I think you could read the percentage of all cash buyers as a data point of home buyer’s confidence in the real estate market. Right now, the market cooling from a long run of exuberance. Let’s see if we get the typical cooling trend in winter.