“How expensive?” tracks measurements of California’s totally unaffordable housing market.
The pain: The relatively affordable Inland Empire is the nation’s No. 2 spot for homebuyers not using a mortgage.
The source: My trusty spreadsheet reviewed a Redfin analysis of all-cash homebuying in 40 major housing markets in June – including seven in California.
The pinch
In Riverside and San Bernardino counties, 40% of sales were cash deals. Only West Palm Beach had a higher share at 50% among the 40 markets. The Inland Empire’s cash share was 36% a year earlier.
Now cash buying is often a money saver. For much of 2024, it saved the buyer from 7%-plus mortgages.
But the Inland Empire is Southern California’s bargain, where a starter home ran $408,000 from May to July, according to Redfin. That’s the region’s low sales price – but let’s note the IE ranks 12th costliest among this collection of US metros.
Ponder that mortgage-less purchases are also common among investors. These cash buyers may eye the Inland Empire’s “affordability” as better deals for Southern California rental properties compared with pricier coastal homes.
Pressure points
Look at elsewhere in Southern California …
Orange County: 30% of sales had no mortgage (No. 21 among the 40 metros) vs. 31% a year earlier. Starter home? $740,000 (No. 3 in the US).
Los Angeles: 23% of sales (No. 33) vs. 21% a year earlier. Starter home? $615,000 (No. 6).
San Diego: 23% of sales (No. 34) flat vs. 2023. Starter home? $652,750 (No. 4).
And Southern California is below the curve on this house-hunting quirk, with 31% of US purchases in June done without a mortgage. That’s a larger share than everywhere in the region but the Inland Empire.
Bottom line
Sometimes you have to acknowledge that there’s not much of a geographical pattern in a dataset.
In this case, it suggests that the few house hunters who can afford to pay all cash want to avoid interest-rate pain. And that is simply more evidence of the massive “unaffordability” of Southern California housing.
Quotable
“The percentage of all-cash sales generally follows the same trend as the rise and fall of mortgage rates. When rates are down, the percentage of all-cash sales is down too, and the opposite is true when rates go up,” said Redfin economist Sheharyar Bokhari. “That means we may start to see all-cash purchases level off a little now that mortgage rates have started to come down from recent highs.”
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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