Monday Updates: Cash Offers and Competition

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?