. When discussing cash buyers it is important to differentiate between the different types of cash buyers and different objectives. While the lower and middle end of the market sees a lot of cash buyers, many are short term investors looking to rehab a home and turn it for a quick profit. This ultimately is inventory that comes back onto the market place for more traditional financed buyers to acquire. Most of the discussion of cash buyers usually revolves around the lower and middle markets and how that affects first time homebuyers.
On the other end of the spectrum in San Diego, we have the coastal luxury markets.
While cash purchases have long been commonplace in luxury areas like
, it is important to understand what drives these markets. Buyers in this arena approach purchases with a broader perspective as it pertains to international alternatives, taxes and currencies and legal systems. A buyer may weigh a purchase against other investment options or real estate in other markets and countries. When compared to international options, luxury real estate in coastal San Diego offers a great value and a safe place for people to invest. We see cash buyers from Canada, Singapore, U.K and Middle East.
Domestically, a lot of wealth has come back through the equity markets the last few years and many investors want to lock in those gains in a safe asset and luxury real estate is a great option. They get to use the property, receive some tax advantages and in the big picture it is fairly valued. Real estate is also a hard asset that can protect against inflation. Others feel real estate offers some security and income without the risks of the bond market. If investors can get a 4% return on real estate without the risks and fluctuations of the bond market, they feel they have more control.
While some consider cash buyers as speculators, we see many cash buyers who are looking at unique