Even if you have the financial means to put in an all-cash offer, you may not want to do so.
All-cash offers can be more appealing to home-sellers, but you also need to take into consideration the other aspects of paying so much cash upfront.
Will you have enough liquidity left? At least a few thousand dollars left in your pocket is ideal. You may have repairs, upgrades you desire to make, and increased utility and maintenance costs for your new house — not to mention your typical costs and unexpected financial needs (such as medical bills or suddenly losing employment).
What if you easily qualify for a mortgage? Interest rates are still on the low-side, and by obtaining a mortgage to purchase a house, you would be able to keep a large chunk of your finances.
Paying all-cash means you miss out on a tax break. When you have a mortgage, you are able to receive a tax break on the interest paid to the mortgage lender.
California pending home sales dip slightly in January; Southern California market continues to outshine other regions
Following relatively strong closed escrow home sales over the past few months, California
pending home sales slipped negligibly from a year ago, which suggests a softening in the
housing market in the upcoming months, the CALIFORNIA ASSOCIATION OF REALTORS®
Making sense of the story
Based on signed contracts, statewide pending home sales decreased in January on a
seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* slipping 0.2
percent from 107.4 from January 2016 to 107.2 in January 2017. On a monthly basis,
California pending home sales were down 9.2 percent from the December index of 118.0.
Only the Southern California region posted a year-over-year improvement in pending sales last month, rising 8.1 percent from January 2016 and increasing 10.5 percent on a
monthly basis. Riverside County led the region in pending sales, posting a 16.2 percent
increase from a year ago. Los Angeles, Orange, and San Diego counties also posted
modest year-over-year increases of 7.1 percent, 8.0, and 4.0 percent, respectively. San
Bernardino County was the only area within Southern California that saw pending sales
lower on an annual basis by 2.8 percent.
For the San Francisco Bay Area as a whole, tight housing supplies and low affordability
contributed to a fall in pending sales of 9.7 percent compared to January 2016. Only San
Mateo County posted an annual increase, rising 5.3 percent from January 2016 after
posting a significant double-digit annual decline (35.3 percent) in December. Pending
home sales decreased 21.2 percent in San Francisco County, 7.1 percent in Santa Clara
County, 24.9 percent in Monterey, and 4.8 percent in Santa Cruz County. A shortage of
homes on the market and poor affordability will likely persist throughout the year, and
impact Bay Area home sales.
Pending sales in the Central Valley fell 7.9 percent from January 2016 and were up 2.2
percent from December. Within Central Valley, pending sales were down 14.6 percent in
Kern County and 11.8 percent in Sacramento compared with a year ago.
Higher wages and seasonal price declines affect California housing affordability.
• “Thirty-one percent of California households could afford to purchase the $511,360 median-priced home in the fourth quarter, unchanged from third-quarter 2016 and up from 30 percent in fourth-quarter 2015.” (“4th Qtr 2016 Housing Affordability”. CAR.org. 9 Feb 2017)
• “A minimum annual income of $100,800 was needed to make monthly payments of $2,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.91 percent interest rate.”
Led by Southern California, state’s pending home sales trends in December.
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Led by the Southern California region, California pending home sales registered gains on a month-to-month and year-to-year basis, portending a moderate increase in sales in the near term, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
The modest sales growth is unlikely to be sustained, however, given the severe shortage of homes for sale and affordability concerns, as indicated in C.A.R.’s December Market Pulse Survey**, which saw fewer listing appointments and less open house traffic.
Based on signed contracts, statewide pending home sales increased in December on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* rising 1.9 percent from 115.8 from December 2015 to 118.1 in December 2016 – even with new mortgage rules that pushed sales higher December a year ago.
On a monthly basis, California pending home sales were up 3.3 percent from the November index of 114.4.
Southern California saw the largest increase in pending sales last month, rising 7.8 percent on an annual basis and decreasing 16.1 percent on a monthly basis.
On the flip side, in the San Francisco Bay Area as a whole, tight housing supplies and low
affordability contributed to a fall in pending sales of 14.2 percent compared to December 2015 and 32.5 percent from November.
Overall pending sales in the Central Valley improved 0.9 percent from December 2015 and were down 18.4 percent from November.
The share of homes selling below asking price fell from 57 percent a year ago to 43 percent in December. Conversely, the share of properties selling above asking price increased to 23 percent from 18 percent in December 2015. The remaining 34 percent sold at asking price, up from 25 percent in December 2015.
For homes that sold above asking price, the premium paid over asking price rose to 11 percent, up from 8.4 percent in November and 9.2 percent a year ago.
The 43 percent of homes that sold below asking price sold for an average of 22 percent below asking price in December, double the November figure of 11 percent, and was up from 13 percent from a year ago.