Continued Cash Sales Decline Speaks to Stabilization of Housing Market

June 2015 marked the 30th consecutive month of year-over-year declines in the share of all home sales that were cash transactions.

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The cash purchase in Silicon Valley for 2015 year to date, is not driven by REOs.  Of the 12,000 plus sold homes in Santa Clara County year-to-date, 18% were all cash.  However, the MLS only reports 5 of those sales as REO purchases.  The REO market has all but dried up for Santa Clara County.  Unlike the rest of the country, our cash buyers are not corporations but more commonly individual investors.

For Silicon Valley, any decrease in cash purchases will most likely be driven by affordability (other U.S./Canadian areas become more affordable), and China’s policy on taking cash out of the country.

If the cash investor declines in Silicon Valley, expect a flattening of prices, and an increase in home supply.  With our demand exceeding our inventory by about 12%, is unlikely a gradual reduction in cash buyers will be recognized in average sales price anytime soon.