Cash deals more prevalent at top end of Sonoma County housing market

Cash buyers remain a force in Sonoma County’s housing market, but today the talk is about how they’re snapping up luxury properties rather than buying rental homes.

Buyers used cash to purchase 25 percent of the single-family homes sold in Sonoma County last year, according to multiple listing data. That is less than in the years after housing prices tanked, but it remains higher than for most of the first decade of this century.

And the biggest concentration of cash sales last year was at the top of the market.

Four in every 10 homes that sold for $1 million or more here in 2015 were bought with cash, according to Pacific Union International Vice President Rick Laws, who compiles The Press Democrat’s monthly housing report. The proportion was nearly double that for the rest of the market.

“It’s obvious where the money is,” Laws said.

Four years ago the conversations about cash sales typically noted the surge of investors that began buying rental properties after the county’s median home price bottomed out at $305,000 in February 2009. The rental properties offered the potential for better returns than could be had from savings or other fixed-income investments.

In 2012, the median price for ?a single-family home in the ?county was $350,000 and 35 percent of all house and condo sales that year were purchased with cash. At the time, first-time buyers complained how difficult it was to compete with the investors.

But last November the county’s median sales price was $528,000. Given that, investors today find it more difficult to locate properties that make financial sense in terms of price and potential rents.

“There’s not a lot of product,” said Marty McCormick, owner of McCormick and Co. Homes and Loans in Santa Rosa.

When examining sales by community, Oakmont appears to have the county’s highest concentration of cash sales, according to data compiled by Mike Kelly, an agent with Keller Williams. Cash transactions easily made up half of all sales there last year.

“Those retirees cash in on the sale of their homes and pay cash” for their new properties in Oakmont, Kelly wrote in an email.

Kelly also examined communities with sales of homes priced above $1 million. The Sonoma area had the most such sales last year, with 140 deals for $1 million or more. Of those, 43 percent were financed with cash.

From 2001 to 2007, cash deals accounted for 13 to 19 percent of the county’s annual home sales, according to CoreLogic. But since then the portion hasn’t fallen below 23 percent.

For the future, cash sales may remain relatively strong as baby boomers sell more expensive homes elsewhere in the Bay Area and retire here, said Laws. Such retirees see the county “as their exit plan.”