The Power of Cash: Approximately 26% of Los Altos Homes Were Sold for Cash in May

Image courtesy of Unsplash

Editor’s Note: This article originally appeared in the Los Altos Town Crier

If you think cash offers have gone away, think again. According to recent data from the MLS, there are still cash buyers out there. In May, 26% of sales in Los Altos were cash offers, while in Los Altos Hills, cash was king in 40% of the month’s closed sales. 

Let’s take a closer look at the numbers.
In May, Los Altos had 31 closed sales, eight of which were cash transactions. In Los Altos Hills, two out of five closed sales were cash deals. In Palo Alto last month, there were 17 cash sales out of a total of 50 (34%); in Mountain View, we had four cash sales out of a total of 32 and, for Santa Clara County as a whole, we saw 848 total sales with 133, or 15%, coming in as cash.  

Why would someone pay cash for their home?
Even if they have the needed money in the bank, isn’t there a high opportunity cost for putting all those eggs in one basket? Yes, but for some, it makes the most sense; some of these cash buyers may refinance later, presumably when interest rates (eventually?) come down and borrowing makes more sense.

Several factors are likely contributing to the availability of cash in our real estate ecosystem.
Some of Silicon Valley’s home buyers have gains from stock positions they are looking to diversify; overseas money can sometimes be in play, and of course, many people seek to leverage their cash position as an advantage in a competitive market.   

The MLS does not accurately record if a seller received multiple offers on a property or any other detail of the selling process, so we can only speculate. Having a local and reliable realtor relationship can offer you access to “boots on the ground” but unrecorded information on how things went down; Realtors frequently are “in the know” when there were multiple offers and whether competitive bidding rounds occurred. For now, we can take comfort in knowing that the real estate market in our local communities of Los Altos, Palo Alto, and surrounding cities seems vigorous and healthy.

Despite the seasonal lull we often see during the summer months, we will continue to see some cash buyers in the mix for the foreseeable future.