Who’s Buying Homes with Cash Right Now?

 

If it feels like today’s housing market is hard to define, you’re not alone. Ryan Serhant, CEO of SERHANT, recently pointed out that there is not just one housing market right now. There are really four: cash buyers, buyers who need a mortgage, homeowners with low mortgage rates, and builders.

Today, let’s focus on the first group: cash buyers.

According to the National Association of Realtors (NAR), 27% of homes sold in September were purchased with all cash. That means more than 1 in 4 buyers did not use a mortgage at all. In a market where affordability is a real concern, that is a significant number.

So, who are these buyers? And what does that mean for your own plans to move?

Cash Buyers Are More Common Than You Might Think

When people hear that more than a quarter of homes are being bought with cash, it is easy to picture large investors scooping up properties. While investors are part of the picture, they are not the whole story.

According to NAR, cash buyers generally fall into three main groups:

• Homeowners who sold a house and are using the proceeds to buy their next one
• People buying a second home
• Investors

That first group is especially important right now. Many current homeowners have built up substantial equity over the past several years. In fact, according to Cotality, the average homeowner with a mortgage has about $310,000 in equity.

That can create more opportunity than many people realize.

How Home Equity Is Helping Buyers Pay Cash

A lot of homeowners feel stuck today because they do not want to trade their current low mortgage rate for a higher one. That hesitation makes sense. But for some homeowners, the amount of equity they have built could change the conversation completely.

If you have enough equity from your current home, you may be able to use those funds to buy your next home outright, or at least make a much larger down payment than expected.

Buying with cash can offer several advantages:

• No monthly mortgage payment
• No need to borrow at today’s mortgage rates
• No loan approval process
• Potentially faster closing timelines

Even if your equity does not cover the full purchase price, it can still go a long way. Using more of your equity toward your next home can reduce how much you need to borrow, which may lead to a more comfortable monthly payment.

Cash Buyers Are Not Distributed Evenly Across the Country

The national numbers are helpful, but real estate is always local.

In some states, cash buyers make up a much larger share of the market than in others. Realtor.com reports that earlier this year, cash buyers accounted for nearly 47% of home sales in Mississippi and 46% in Montana.

That does not mean every market looks the same. The share of cash buyers in your area depends on a mix of factors, including:

• Local home prices
• Buyer demographics
• Retirement and second-home activity
• Overall affordability

In other words, what is happening nationally may not reflect what you are seeing in your neighborhood or price range.

Most Buyers Still Use a Mortgage

If all this talk about cash buyers makes it sound like everyone is paying cash, take a breath. They are not.

Based on NAR data, nearly 3 out of 4 home purchases still involve financing. And according to Realtor.com, for homes priced between $200,000 and $750,000, only about 1 in 5 sold for cash.

That means most buyers in that price range are still using a mortgage.

So if you are planning to buy and need financing, you are far from alone. In fact, you are in the majority.

What This Means for You

The big takeaway is simple: do not assume your options are limited based on headlines or social media chatter.

If you already own a home, your equity may put you in a stronger position than you think. You may be able to move with more flexibility, reduce your borrowing needs, or possibly purchase your next home without a mortgage at all.

If you are buying with a loan, that is still the most common path. You do not need to assume you are at a disadvantage just because some buyers are paying cash.

What matters most is:

• How much equity you have
• What your budget looks like
• What is happening in your local market
• The types of buyers you are actually competing with in your area

Bottom Line

Cash buyers are an important part of today’s housing market, but they are not the whole market.

For some homeowners, built-up equity is making an all-cash purchase possible. For others, a mortgage is still the right and most common way to buy. Either way, your next move should be based on your finances, your goals, and the realities of your local market.

If you want to understand how much equity you may have and what buyers in your area are really doing, let’s talk. Zac Pasmanick with The Zac Team can help you look at your options and create a plan that makes sense for you.

Call or text Zac at 14045647272, email zac@zac.biz, or visit https://mlsinatlanta.com to get personalized guidance on your next move.