Maybe techies flush with start-up funds shouldn’t get all the credit—or the blame—for the high housing prices in the San Francisco Bay Area.
A new report says that tech buyers accounted for a small percentage of all-cash deals during a five-month period earlier this year.
The study by John Burns Real Estate Consulting looked at the 323 cash transactions from February through June 2015 handled by the real-estate agency Pacific Union. The goal was to figure out who makes up northern California’s wealthiest buyers.
“The profile was far less international and tech industry than we thought it would be,” the report says. While homebuyers who hail from tech world were certainly in the mix, they made up just 12% of the cash transactions.
International buyers were behind only 6% of the transactions, despite Pacific Union’s strong worldwide presence. China barely made a dent, with just 2% of sales.
So who is plunking down piles of cash for a piece of Bay Area real estate? According to the analysis, 42% of the cash sales came from a well-heeled mix of white-collar professionals such as consultants and investment bankers.
Pacific Union International Inc.
The remaining 40% included retirees, athletes, artists, and students with family money.
The information on the buyers came from surveys of the real-estate agents involved in the deals, according to Pacific Union chief executive Mark McLaughlin.
In the Bay Area market, cash buyers accounted for 21.5% of total home sales in October, according to real-estate data provider CoreLogic. The share peaked at 32.9% in February 2013; the monthly average since 1988 is 14.9%.
As unexpected as the results of this study may seem, they fit in with a larger national trend.
“I see a surge of all-cash buyers in other cities like New York, Chicago, Dallas, etc., and San Francisco is no different. Because of the tech influence, people assume the demand is all tech, but it is not,” said John Burns, chief executive of John Burns Real Estate Consulting.
Among the cash buyers in the study, 66% said they intend to use the homes as primary residences.
This study’s findings could be viewed as a silver lining if the tech industry faces a slowdown. Burns said, “I believe some people think a tech correction will kill San Francisco home prices. While it won’t be good, people should know that there is quite a diversified pool of buyers today, so prices are not only dependent on tech.”
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