All Cash Deals: Why Rich Homebuyers Don't Borrow

California has hit a record for buyers striking all cash deals for houses, particularly on the ultra-high end. Apparently, some 31 percent of all buyers in California paid cash -- and the higher up you go in the price category, the greater that percentage. For example, 62.2 percent of people buying homes worth at least $5 million paid all cash.

On the surface, this does not appear to be all that surprising. We've known for years that it is harder and harder to get a mortgage, especially if you are self-employed and can't produce a pay stub. The wealthier people in America tend to be business owners, so I suppose it makes sense that more of them would pay cash.

Plus, California is one of the epicenters of the foreclosure crisis. Investors and homebuyers are jumping in to pick up properties they think are once-in-a-lifetime bargains. So that makes sense.

But here's what I wonder. Rich people didn't get to be rich because they're stupid. Nor did they become rich throwing money around loosely. Investors in particular don't just go plopping down a couple of million bucks on a whim; they tend to think about those decisions pretty carefully.

So what do they know that the rest of us don't?