Monday Updates: Cash Offers and Competition
There’s no refuting that the San Francisco Bay Area is a great place to live. It’s the kind of place that’s loved by locals and desired by tourists. And San Franciscans aren’t the only people taking note of everything the area has to offer from a strong job market, great schools, and an overall high quality of life. In recent years, many Bay Area home buyers have come from abroad, more specifically, China. And they are ready to pay up front and in cash for the home they desire.
Yesterday CBS Bay Area reported on this influx of foreign capital entering the market and the reasons behind it. The three main reasons highlighted were: asset diversification, education, and lifestyle. Places like Palo Alto for example have a nationally renowned school district that attracts many families to the area. The Palo Alto Unified School District has outstanding API scores (proudly averaging at 932 in 2013) and a rich sense of community involving teachers, students, and parents. Not to mention the prestigious Stanford University nearby as well.
The article also noted that buyers from abroad are not looking to become sellers any time soon. They are ready to pay upfront, in cash, and often with an offer of thousands over the asking price. This is because they are in it for the long term. Buyers who make these dramatic offers are not looking to sell in the next few years. What’s the result you ask? Well, this long term mentality has (and will) increase housing prices. Hence, we’ve got ourselves a buyer’s market where the supply of San Franciscan housing nowhere near matches the overwhelming demand. Cheery, right?
Cash offers used to make up a quarter of the home sales in the U.S. and this has risen to a hefty 40%. We advise that if you’re looking to buy a home, have your finances in order and make sure you’re pre qualified. Because the competition? It’s fierce!
What are your thoughts on why people want to live in the Bay Area?
