Since this confused me: cash buyer in relation to housing is someone paying the full amount without using a mortgage. They are probably using checks or wire transfers instead of metal briefcases filled with $100 bills.
It’s important because it distorts local markets where wage earners who need a mortgage and are governed by a monthly payment are competing with these market participants.
Another possible explanation is that there are more people/entities with large amounts of cash, or less people with enough income to buy a house, or both.
Or maybe all three.
That's not a cash offer unless the property being purchased is far lower in purchase price than the profit off the sale of the first home (i.e. due to downsizing, or moving from a much higher to much lower cost area), in which case it is a different housing submarket, and there could be a net local demand increase.
This includes nearly all senior citizen purchases, but it's also a surprising number of 40/50-something wage earners who bought in HCOL areas around 2010, saw their $800K homes appreciate to about $2M, have paid the mortgage down to about $450K (or paid it off entirely, using stock price appreciation), and also have a couple million in appreciated stocks from saving abundantly during the 00s and 10s and enjoying the stock price appreciation.
Or if you are buying an $80k property with the proceeds, it is so different than the sold property - either much smaller or less desirable in some way - that you are buying in what is effectively a different market altogether.
"Anti Money Laundering" laws to stop that happening never managed to actually be passed into legislation in Australia [0] despite many "attempts" since 2006 (the politicians forming discussion groups of committees for re-reviewing the potential idea of AML every few years then seemingly deciding it's too scary to be labelled as the cohort who stopped the vast money laundering into property in Australia).
KYC only exists for banks here, and we are near the bottom of the barrel when it comes to money laundering compliance [1] (Australia is one of only 8% of countries assessed by the FATF’s 4th Mutual Evaluation process as being totally non-compliant)
A suitcase of cash buys a criminal the choicest realestate plus a chain of anonymous Australian shell companies controlled by Panamian or Cayman Islands companies.
The actual beneficial owner of the property can rarely be determined in these cases.
Or even worse, they leverage their crime proceeds and get fat bank loans. Our largest bank was in on it too, they've been caught so many times [1]
A new book [2] titled "The Lucky Laundry, How the Aussie Economy Got Hooked on the World’s Dirtiest Cash" was recently published about Australia's wilful ignorance in turning a blind eye to crime because of greed and rampant capital appreciation (many yearly house price rises are greater than the owner's annual gross salary/wage before tax)
[0] https://www.macrobusiness.com.au/2021/09/australian-property...
[1] https://michaelwest.com.au/do-not-stuff-up-this-institution-...
[2] https://michaelwest.com.au/lucky-laundry-review-aml-australi...
It it open slather anything goes.
Meth money buys a lot of houses.
Global embezzlers flee their defrauded victims and find safe havens in Australia.
Lots of people clip the ticket and the govt makes more tax money, so why rock the boat and ask why a 22 year old has $2 million in cash?
Let me set you up with a few shell companies for blind asset holdings then we will visit my friend the real-estate agent...
All that said, in the Bay Area at least a cash offer from an individual means just that: the person buying it likely just sold a ton of stock, or their startup got bought, etc. I personally know people have done that (in some cases out of necessity: sellers favour short closing and no financing issues)