Builders, banks offer free job-loss insurance to home buyers,0,7063022.story
Original Post Date: March 27, 2011

By: Kenneth R. Harney

Reporting from Washington —

Insurance programs that make borrowers’ mortgage payments for up to six months if they lose their jobs during an initial one- to two-year coverage period are gaining popularity. Home builders are offering it to new buyers, and some of the country’s largest banks and mortgage lenders think it’s a win-win idea for shaky economic times.

Better yet, the bank, builder or other sponsor of the plan typically provides it free — no direct, out-of-pocket cost to the consumer — as part of its marketing package. Most programs come with specific dollar ceilings on coverage, often ranging from $2,000 to $2,500 a month. Some limit the amount they’ll pay to principal and interest only. Others cover principal, interest, property taxes and homeowners insurance up to a specific amount.

Although there are no hard statistics on the number of such plans in the marketplace, Teri Cooper, executive vice president of Mortgage Payment Protection Inc. of Heathrow, Fla., one of the largest providers of “involuntary unemployment” policies, estimates that as many as 200,000 buyers are covered by her firm’s Mortgage Guardian programs alone.

Bank of America, which operates a “borrower protection plan” that the bank funds itself, says it has covered thousands of new mortgages — limited to those with initial principal balances less than $500,000. Terry H. Francisco, a spokesman for the bank, said the plan has covered $110 million in monthly payments for unemployed borrowers during the last two years. During 2010, the bank provided 156,000 purchasers with its protection program; as of last December, mortgages covered by the plan totaled $36 billion in loan balances.

In the Seattle-Puget Sound market, Quadrant Homes, a subsidiary of Weyerhaeuser Real Estate Co., recently began offering an insurance plan as a way to reassure buyers that they’d be able to withstand an unexpected job loss.

With unemployment figures scarily high, said Ken Krivanec, Quadrant’s president, “we wanted to give our buyers a little of the confidence they might need” to move ahead with a purchase.

Virtually all involuntary unemployment programs charge borrowers nothing for the coverage directly, but there’s often plenty of fine print that limits payouts under certain circumstances.

Here’s a look at some of the features that buyers and borrowers should focus on when they’re offered free job-loss mortgage insurance.

•Obviously, nothing is truly free. The lender or builder typically is paying a wholesale insurance premium to obtain the coverage, and rolls that into the deal somewhere. In the case of Mortgage Guardian’s programs, premiums range from $200 to $300 and up per policy, depending on the expected volume of insurance, the length of the coverage and the size of the insured monthly payment.

•Not all unemployment events are equal. Under most plans, you need to be eligible under state law for unemployment benefits, and you need to successfully apply for them. Also, the layoff or plant closing or other event cannot have been known to you in advance of the mortgage closing. Firings and dismissals for cause are not covered.

•Not all employment is equal either. For example, if you are self-employed, or are a temporary or seasonal worker, you probably won’t be eligible for benefits.

•Once you’ve closed escrow, there’s a 60-day vesting period in the Mortgage Guardian program. Then insurance payments can’t flow until 30 days after unemployment begins.

•For virtually all programs, once the initial period of coverage is up, homeowners are expected to either pay premiums on their own or look elsewhere for insurance. Bank of America’s plan, for instance, is free for the first year. After that, extended coverage is available at the rate of 7.5% of the monthly principal and interest due, Francisco said. In Quadrant’s program, “coverage ends 24 months after the closing date and cannot be extended by the buyer or Quadrant Homes.”
Another key fact to keep in mind about job loss insurance for mortgages: It is generally not available direct to the consumer. Cooper says her firm works only through participating lenders, builders, mortgage insurers and some state housing agencies that can create the volume of business needed to make the insurance risk-pooling feasible.

Bottom line: If you understand the limitations and read the fine print, job loss coverage can be a “why not?” proposition. The builder or lender offering it is paying premiums at rates unavailable to individual consumers, and the coverage — if you qualify — is for real if you suddenly find yourself without employment.

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New homes in U.S. are growing, survey finds,0,7399811.story
Original Post Date: March 27, 2011

By: Lew Sichelman

Reporting From Washington—

Forget what you’ve heard about the incredible shrinking house. New homes are getting bigger, not smaller. And they will continue to grow, if not up then certainly out.

Why? Because Americans’ hunger for more space appears insatiable, according to a new survey.

The study of people with a proclivity toward buying a new house, conducted by Irvine company John Burns Real Estate Consulting, found that they still want more, not less. And if they can’t get it inside the walls, they’ll take it outside in the form of yard space.

The study is significant for several reasons. First, it covered nearly 10,000 people, a huge sample by any standard.
By comparison, the typical consumer survey by the National Assn. of Home Builders, or NAHB, covers just 2,200 respondents.

Second, respondents to the John Burns study were among 1 million survey recipients who recently registered their email addresses with home builders or land developers, so it is biased toward today’s home shoppers.

More important, though, the findings run counter to what most observers have been saying about houses getting smaller. Builders may be downsizing now, as Census Bureau figures indicate, but other signs — not just the Burns survey — indicate that the trend will reverse itself.

The typical size of a new house peaked four years ago at 2,520 square feet, according to the census, ending a decades-long march toward larger and larger homes. Since then, the average size has fallen back to 2,377 square feet.

But Uncle Sam counts only completed houses. Another survey, this one of housing starts by the NAHB, shows that the average size of houses still under construction was 2,391 square feet at the end of last year.

The bump up is minor, just 14 square feet, hardly the size of a decent walk-in closet. But NAHB economist Rose Quint said her December study was a “much more timely” indicator.

Quint warns against reading too much into the numbers because a second NAHB survey of a core group of builders, also in December, found that most were putting up smaller, less-expensive models.

Furthermore, another broad poll of builders, architects, manufacturers and allied professionals predicted that by 2015, the typical new house would dwindle to 2,150 square feet.

It’s not unusual for houses to slim down during a recession, if only because first-time buyers tend to dominate when the market goes into a tailspin. And this time around, the large number of bargain-priced foreclosures that have flooded the market has hastened the compression.

But after every previous downturn has run its course, square footage has increased. David Crowe, the NAHB’s chief economist, says larger houses could again rule the roost if that’s what the market demands.

“Demographics drive what we build,” Crowe said. “We have to look at who’s coming into the marketplace, and we will cater to what they want.”

What they hunger for, according to the John Burns survey, is more. “Americans’ desire for space is still there,” said Mollie Carmichael, a principal in the firm.

Right now, the market is being driven less out of want and more out of need. In other words, the majority of buyers are people who have to move for one reason or another. Maybe they just got married, or perhaps they have a new baby on the way.

Six or seven years ago, buyers were moving from 2,500-square-foot houses to 3,200-foot manses mostly because they found something better than where they lived. Now buyers are jumping from 1,500-square-foot houses to 2,200-square-foot places out of necessity more than anything else.

“It’s all predicated on life stages,” Carmichael said.

And now that the move-up market is starting to kick in, the consultant thinks those buyers will want more space too. She said a majority of survey respondents “told us that their next home would be bigger than their current home.”

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When Sellers Stay After Closing

Post Date: March 18, 2011

By: June Fletcher

Q. I’m about to close escrow on my first home. The sellers want to rent the place back for a few days after the closing. I want to be accommodating, but the thought makes me nervous. What if they won’t move out after we close?

— Freehold, N.J.

A. You have reason to worry. Once you have closed, you lose whatever leverage you once had over the sellers. Should they decide not to leave, you could be put in the expensive and awkward position of having to evict or sue them. That’s why it’s always best if sellers hand over the keys and leave the premises before you close.

But because things don’t always happen on a predictable timetable, it’s neither unusual nor unrealistic for sellers to ask to stay on for a few days. For instance, they may be encountering a delay in obtaining a mortgage to buy another home; or, if they are buying a newly built home, it may not be finished by the time your closing is scheduled.

Since the sellers can always move to a hotel or stay with a relative, you don’t have to go along with this request. But if you do, you must insist that they pay rent. At minimum, the daily amount should be equivalent to a prorated share of what you pay for principal, interest, taxes, insurance, utilities, trash collection and other operating costs, plus a cushion to cover any damages that might occur during their tenancy, however short it may be. To make sure you can collect, your attorney, title insurance company or real estate agent should hold this money in an escrow account.

Furthermore, you should tack on a hefty daily penalty—say, $250 per day—for each day that they stay beyond the scheduled departure date.

If all goes well and the seller leaves on the agreed-on day, do another walk-through of the home, even if you already did one before you purchased the house. Flush the toilets, open the windows, turn on the appliances and make sure everything is in good working order. Check your contract to make sure that those things that it stipulated would stay, like chandeliers and window treatments, are still there. If you do find something amiss, take photos to prove it.

Despite these precautions, sometimes sellers do overstay their welcome. If that should happen, you should try to be firm but also diplomatic, as you don’t want the seller to do something vindictive, like pouring concrete down the toilet, that might vandalize or damage your home. Nevertheless, should the sellers decide to become squatters, you should be prepared to begin formal eviction procedures.

And while we’re considering worst-case scenarios, before you agree to allow the sellers to stay on, ask your insurance agent if your policy will cover the time period before you take possession. Should your house be damaged or burn down during that time, you need to be protected.

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Buying a First Home

Original Post Date: March 20, 2011

By: Rachel Louise Ensign

Last fall, Gretchen Steinmiller Torres and her husband, Dustin, bought their first place, a $204,000, four-bedroom, 2½-bath house in the suburbs of Columbus, Ohio — even though they didn’t have immediate plans to use much of the space.

“We have a baby room in our house with no baby,” says Ms. Torres, 29 years old, adding that the newly constructed home is in a good school district. Now they just have to grow into it.
Forget the starter home.

With housing prices stagnant and still falling in many parts of the country, and interest rates still relatively low, younger first-time buyers are finding that they can afford more house than they would have a few years ago. And they don’t have the complication of having to unload an existing home that also has dropped in value before they can buy a new one.

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Buying a First Home (Continued)

But the current market also presents some challenges for younger buyers. Many lenders are requiring higher credit scores and larger down payments. Mortgages insured by the Federal Housing Administration, a popular option for first-time buyers, are getting higher fees. And buyers should prepare to stay put for a while since home prices aren’t expected to rebound any time soon.

The median existing-home price was $158,800 in January, down 3.7% from a year earlier and down 24.7% from January 2007, according to the National Association of Realtors.

The most important thing younger buyers should do is get their credit in order — especially since many have a limited credit history. John Prom, a mortgage banker in New York, says paying off some student-loan or credit-card debt can boost your credit score within months.

The Torreses met with a mortgage adviser about eight months before putting a bid on their home. At the adviser’s suggestion, they paid off most credit-card balances, didn’t open or close any accounts and let their apartment’s lease run out.

“It took us from a position where we didn’t have any financing options available to one where we had very good credit,” says Ms. Torres, who works in public relations.

Many lenders are now requiring larger down payments. Unless younger buyers are earning a lot and have perfect credit, traditional lenders will want them to pay at least 10% upfront, says Sid Davis, a real-estate broker in the Salt Lake City area.

Younger first-time buyers often opt for FHA-insured loans since these only require 3.5% down, have lower interest rates and are typically easier to qualify for. The average interest rate on a 30-year FHA loan was 4.58% last week, according to The average rate on a 30-year fixed-rate loan was 4.76%.

But a down payment of less than 20% means you’ll be required to pay for private mortgage insurance. And the fees on that insurance with FHA loans are going up April 18.

The Torreses say they chose an FHA loan, which had a 4.14% interest rate, since they didn’t want to drain their savings for a higher down payment.

While you may get a great deal on a first home, the downside is its value probably won’t appreciate as much, and as quickly, as it would have a few years ago. That could be a concern for younger people who tend to move more often as they try to advance their careers.

Younger buyers should anticipate staying in a house for a long time since it may take years to recoup buying and closing costs alone, says Mr. Davis. “In today’s market, [that could take] five years,” he says.

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For Housing Values, Is Bigger Better?

Original Post Date: March 11, 2011

By: June Fletcher

Q. I have been thinking about downsizing my home to save money. But I’m wondering if that’s smart from an investment standpoint. Will a smaller house hold its value as well as a larger one?

–Montclair, N.J.

A. If the small house is in the same general vicinity as the larger one, probably not. That’s because, all other things being equal, people will almost always equate size with status. Moreover, as the effects of the economic downturn linger on, spare bedrooms become more critical as unemployed adult children move back into the family home, perhaps joined by grandparents whose 401(k)s have shrunk.

In fact, the downturn already seems to have hurt the value of smaller homes relative to larger ones. Leesburg, Va., economic consultant Tom Lawler pointed out in his March 10 market commentary that “as has been the case since at least the end of last year’s homebuyer tax credit, the prices of smaller homes showed more weakness than the prices of larger homes.”

Smaller homes also start out at a relative disadvantage to larger ones because they often cost more per square foot. That’s because every house needs certain high-ticket items, like a heating, air conditioning and ventilation system, at least one bathroom and a kitchen. As a house gets bigger, the incremental cost for these pricey items lessens.

However, when it comes to value, size isn’t the only consideration. Shape matters too. Because a single-story house requires a bigger roof and foundation than a multistory one with the same square footage, it usually will cost more per square foot. The quality of materials, height of walls, level of trim, number and shape of windows and difficulty of construction all factor in, too.

So it’s possible for a jewel-box rambler with coffered or vaulted ceilings, bow or bay windows, top-of-the-line kitchen and tumbled marble floors to be more expensive than a big boxy Colonial nearby with only builder-grade fixtures and finishes.

And, of course, many external factors also impact the value of a home, including lot size; the age of the community and its amenities, like neighborhood tennis courts and swimming pools; views; proximity to urban attractions and public transportation; and even landscaping.

How important all of these things is largely a matter of personal taste, as well as what stage you’ve reached in life. So don’t get too hung up on cost-per-square-foot comparisons. Let your lifestyle and your budget dictate the type of home you live in.

However, if you only are considering new homes, keep in mind that they are expected to shrink in the near future, as builders scramble to compete with cheap foreclosures. A recent survey of 238 builders and designers by the National Association of Home Builders showed that 74% expect new homes to be smaller by 2015, with homes averaging 2,152 square feet or about 10% less than those built in 2010.

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FHA Powers What’s Left of the Home Market

Original Post Date: March 6, 2011

By: Amy Hoak

As one of the few backers of low-down-payment mortgages in a time of stringent lender underwriting, the Federal Housing Administration has become a primary means of financing for U.S. home buyers.

But as the government moves to reform the mortgage market, the FHA is heading for some changes that could limit borrowers’ access to the loans — or at least make them more expensive.

About 56% of mortgages for a home purchase were FHA-insured in 2009, up from 6% in 2007, according to a report from the George Washington University School of Business. Many FHA borrowers are first-time buyers drawn by a down-payment requirement of just 3.5% of a home’s purchase price.

The FHA currently can insure loans of up to $729,750 in high-cost markets, but the Obama administration recently recommended that those higher limits, which vary by market, expire in October. That would push the top limit down to $625,500, shrinking the pool of eligible properties. And those limits may be reduced even further.

Meanwhile, on April 18, the annual mortgage-insurance premium on new FHA loans is set to rise by a quarter of a percentage point on 30- and 15-year mortgages, a move that will “bolster the FHA’s capital reserves and help private capital return to the housing market,” says David H. Stevens, the FHA’s commissioner, in a news release. That change will mean an average increase of $30 to a borrower’s payment each month.

There could be more changes on the way, too. “A lot of people think it’s just a matter of time before they increase the down payment from 3.5% to 5%,” says Guy Cecala, publisher of Inside Mortgage Finance.

U.S. Department of Housing and Urban Development spokesman Lemar Wooley says there are no plans under way to increase the down-payment requirement, a move that would require Congressional approval. But, he adds, some members of Congress have suggested the increase.

“It’s tough for the government to be saying, ‘We want to help underwater borrowers; we think there should be principal forgiveness.’ At the same time, they are creating a whole new wave of underwater borrowers by offering 3.5% [down-payment mortgages],” Mr. Cecala says. If borrowers put 3.5% down on a mortgage and home prices fall by 5% over their first year in the home, they’re already underwater, he says.

A Role in the Recovery

The FHA played a major role in assisting the housing market during the economic collapse in 2008 and 2009, says Robert Van Order, professor of finance and co-author of the George Washington University School of Business report. Loan limits were raised to help people gain access to credit in the country’s high-cost markets.

Since then, the FHA has remained a popular mortgage source for borrowers who don’t have a large down payment. “FHA has certainly been the predominant way of doing low-down-payment mortgages in the past couple of years by far,” Mr. Van Order says.

Conforming mortgages, or those that can be bought by Fannie Mae or Freddie Mac, commonly require higher down payments than FHA loans require. The catch to an FHA-insured loan is that you’ll pay more in fees.

On an FHA mortgage, borrowers pay a 1% upfront premium that can be rolled into the loan amount, says Scott Sheldon, a loan officer for First California Mortgage in Petaluma, Calif. Borrowers also pay an annual premium, spread out over monthly payments. Those with a 3.5% down payment now pay a 0.9% annual premium, but that will go up to 1.15% in April, he says.

Borrowers don’t face those costs on a conforming mortgage with 20% down.

But Mr. Sheldon says some borrowers are going the FHA route regardless of the costs — even those who can afford a larger down payment — because they’d rather keep their cash liquid and invest it in other ways. FHA mortgages now make up about 75% of his business; a few years ago, he wasn’t doing any FHA loans.

The desire for low-down-payment mortgages is so attractive for some Americans that higher FHA monthly premiums might not have much of an effect on demand. “There’s very strong use by first-time home buyers, who are most challenged in coming up with a down payment,” Mr. Cecala says. “That’s not going to change even with the higher fees.”

According to the Mortgage Bankers Association, 75% to 80% of FHA purchase loans are for first-time home buyers, says Michael Fratantoni, vice president of research and economics for the MBA.

Winding Down FHA Financing

While some in the industry say FHA loan limits should remain elevated until the housing market has stabilized completely, most agree that for the FHA to stay true to its mission of helping low- and moderate-income Americans, the limit must come down over time.

“Someone getting a $662,500 mortgage [the loan limit for Sonoma County, Calif.] clearly is not a low-income person,” Mr. Sheldon says. The FHA’s role is to help families that otherwise wouldn’t be able to buy a home, he says.

Reducing the loan limits could have a favorable effect on the FHA’s finances. FHA mortgages traditionally perform worse than Fannie Mae and Freddie Mac mortgages — meaning a greater share of FHA mortgages end up delinquent, Mr. Cecala says. But bigger FHA mortgages on the books aren’t performing as well as smaller FHA mortgages, according to the George Washington University report.

The loans valued at the highest levels, or more than $350,000, are performing about 20% worse than smaller loans that are representative of more traditional FHA loan amounts, the report found. “Serious delinquencies went up as the balance went up,” Mr. Van Order says.

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New Rules for First-Time Home Buyers

Original Post Date: March 8, 2011

By: AnnaMaria Andriotis

Without a house to sell, first-time home buyers have had a field day in the depressed housing market. Until recently, anyway. A series of new rules, regulations and policies have changed the landscape, making buying that new home harder and more expensive.

Not long ago, first-time buyers accounted for 40% of home sales. Now they’re down to 29% and falling, experts say, as first-time buyers confront a steady accumulation of rising fees, costs, and rates. This month, fees on most new mortgages will rise by up to 0.50%. In April, fees on small-down-payment mortgages, a first-time buyer favorite, will spike. Meanwhile, more lenders are requiring larger down payments, and new proposals from the Obama administration call for mortgages to become more expensive and limited in size.

The new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years. Banks and other lenders lost billions of dollars on subprime and other risky mortgages, and some must now buy back bad loans they sold to Fannie Mae and Freddie Mac. To cover those losses, banks and the agencies are raising fees on new mortgages, says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Also, from the perspective of lenders and the government, making it harder and more expensive to get a mortgage will deter or cull the riskiest borrowers and minimize defaults.

But taken in total, all this reform means the window of opportunity for first-time buyers may be closing. Home prices still seem to be near the bottom, mortgages are still cheap and, though they have increased over the past five months, interest rates are still low. Of course, there are still reasons to wait to buy: The changes to the mortgage market could depress home sales and prices further. But for those who don’t want to wait, here are the new rules for first-time home buyers.

New rule: Put more money down.

Not because you’ll have to — it’s still possible to make a down payment of less than 5% — but because you want to. Insurance fees on the government-insured mortgages that require just 3.5% down have doubled in seven months, to up to 1.15% (as of April). On a 30-year, $300,000 mortgage, a buyer would pay $30,000 more in fees than if he had signed up for the mortgage in September. Also, between new lender requirements and cash-flush buyers, down payments have been rising since the last half of 2010 and now average 34% of the purchase price, according to the latest data by mortgage-data firm CoreLogic.

It’s unlikely that a first-time home buyer can save so much money for a down payment, especially in high-priced markets like New York and San Francisco, says Cameron Findlay, chief economist at, which tracks mortgage rates. Instead, first timers might need to consider alternative options to get cash , like grants offered by individual states. And most lenders still permit buyers to use cash gifts from family with a notarized letter from the donor stating that the money doesn’t need to be paid back, says Gumbinger. Or, a buyer who’s open to co-owning a home can sign up for a mortgage with a co-applicant who has extra cash to put down but wants a stake in the property.

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New Rules for First-Time Home Buyers (Continued)

New rule: Stay for a decade.

Not only are the days of flip-and-move long gone, but buying a house has become truly a long-term investment. In many cases, 10 years long, says Paul Bishop, vice president of research at the National Association of Realtors — if buyers are hoping to make a profit or just break even. As mortgage fees rise, buyers have to recoup larger costs, which takes a longer time. Also, experts predict very slow growth in home prices over the next 10 years, which means it will take a long time before sellers can make a profit, says Findlay. Of course, buying a home may still make financial sense, but buyers’ focus should shift from rising prices to building equity.

For first-time buyers, this means avoiding homes that require renovations, if it’s possible — it will only take longer to recoup the costs of a new kitchen or deck, says Findlay. Instead, stick to a home that requires few major projects, which builds equity with the passing of time. Also, a bigger down payment can cushion the blow for buyers who end up having to sell in a hurry, because it lessens the chances of owing more money on the home than it’s worth should values drop.

New rule: Brace for competition.

Following the housing downturn, desperate sellers were often eager to accept an offer – any offer. But now, first-time buyers looking for discounted prices may be disappointed. Over the past few months, investors, international buyers, and downsizing retirees have made a noticeable impact on the market, because they’re paying with cash. In January, about 32% of purchases were made with all cash, up from 26% a year ago, according to the NAR. Sellers are often more inclined to accept these offers since they don’t need to wait for a lender to approve financing, says Karen Trainor, managing broker at Weichert Realtors in Ashburn, Va.

To stand out, first-time buyers can present an offer with few contingencies, she says. At this point, given growing competition among buyers, there’s little reason for a seller to work with someone who requests repairs or asks them to cover the closing costs. But offers from buyers who ask strictly for a home inspection and appraisal – two requirements they shouldn’t give up – are more likely to get accepted than all-cash bids with a long list of requirements.

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Cash-only home sales rise in California,0,6744443.story

Original Post Date: March 1, 2011

By: Lauren Beale

Cash talks. And it’s speaking loudly in California real estate these days, even in the nicest parts of town.

All-cash buyers grabbed a record 30.9% share of the Golden State’s houses and condos in January as low prices lured investors and others, according to San Diego research firm DataQuick Information Systems.

Cash activity has been brisk for months in foreclosure-ridden areas such as Riverside and San Bernardino. But now, the cash buyer has become a major player in Southern California’s most expensive communities, where cash deals account for as much as two-thirds of home sales.

The trend is being driven by several factors, analysts say, including the difficulty of getting a “jumbo” loan from lenders still stinging from the mortgage meltdown. It also reflects speculation by wealthy investors who believe home prices are at or near a bottom.

“A lot of people think housing will outperform other financial investments,” said Andrew LePage, a DataQuick analyst. “This is just a place to park their money.”

In the Southland’s $1-million-and-up market, 29.2% of buyers paid cash last year — the highest percentage since 1994, DataQuick statistics show. For homes selling for $5 million and up, 62.2% paid cash.

Overall, cash deals constituted 27.8% of Southern California home sales in 2010, the most since DataQuick began tracking the market in 1988. It’s also more than double the 13% average for cash sales over the last decade.

The shift toward cash purchases started when foreclosures became a significant factor in the market, said Gary Painter, director of research at the USC Lusk Center for Real Estate. That’s because investors buying properties on the courthouse steps don’t go looking for mortgages.

“There have always been all-cash investors who think they can go in and flip a home,” he said.

There’s just more of them now. Cash buying has reached fever pitch in parts of Orange County, where the Balboa community of Newport Beach saw the highest percentage of sales going to cash buyers last year of any $1-million-plus Southland community — 66.7%.

Chris Crocker, a Coldwell Banker broker in Corona del Mar, said well-heeled buyers are using cash to acquire investment properties and second homes or to better their portfolios.

“Buyers are looking out 10 years, and buying a trophy property for 40% off its price” before the housing downturn, Crocker said.

Within a five-mile radius, his office closed 24 all-cash deals in the $5-million-and-up price range in the last six months.

“The smart money is ahead of the game and buying before the summer selling season when they will have competition,” he added.

Other big cash markets were Montecito, with 57.2% of sales, and Beverly Hills, with 45.6%.

“All-cash buyers are becoming the optimum buyer,” said agent Ian Brooks of Rodeo Realty, Beverly Hills. “I just closed three deals in a row that were all cash.”

Among the properties was a $1.73-million condo at the Azzurra in Marina del Rey, a 19-story building known for its collection of paintings, sculptures and photographs by artists including Andy Warhol, Ed Ruscha and Roy Lichtenstein that adorn the lobby and other public areas.

Brooks says most of his clients who pay cash are investors looking for a fast close.

“We call it land banking,” he said, “because buyers are literally taking these condos and homes and they are betting prices will go up.”

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