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Today’s housing market splits into four distinct types:
- Cash buyers
- Buyers financing a purchase
- Owners who feel locked into a low rate
- Builders with homes to sell. Which type you’re in changes how you should buy or sell.
Here’s what each looks like, and what it means for you.
Cash Buyers
1 in 4 buyers are paying with cash. If you already own a house, you may be able to purchase your next place in cash, thanks to your equity. In fact, 26% of existing home sales this summer were all-cash, according to the National Association of Realtors (NAR). That’s roughly 1 in 4 buyers skipping a home loan entirely.
Data from Realtor.com shows most are at the very top and very bottom of the market by price point.
- If you’re able to buy in cash, your offer will definitely be appealing to sellers. You may get a faster close and more room to negotiate.
- For sellers, a cash offer can mean less risk of the deal falling through, but that may come with a lower offer. Compare the whole picture before deciding.
Buyers Using Financing
Data from Fannie Mae shows nearly half of experts actually raised their long-term rate forecast this year. That’s tough for homebuyers relying on a mortgage, especially first-time buyers. But it’s not all bad news.
- For buyers, you may not want to continue waiting for interest rates to drop
- As a seller, consider building a rate concession into your pricing strategy from the start. This could be the thing that gets a deal done.
Rate-Locked Homeowners
Are you sitting on a rate below 5 percent? Understandably, you may be hesitant to move and take on a higher rate. About 2 in 3 homeowners have a mortgage rate under 5% according to Federal Housing Finance Agency (FHFA) data. When a homeowner has a rate that low, they are less motivated to move and leave behind that low rate. Hence “rate locked” – they feel locked in.
According to Fannie Mae data, most experts believe the lock-in will stick around another 3-5 years.
- Fewer homeowners are listing, but the ones who do usually have a real reason to move. They’re often more flexible, motivated sellers.
- If you’re considering selling, run the math on what your equity actually buys before ruling out a move. Have an FHA or VA loan? Ask about making it assumable. It can be a real selling point.
Homebuilders
If you’re looking at new construction, this might be your moment. According to the latest Census data, builders have more unsold new homes sitting than usual. That’s pushing builders toward price cuts and rate buydowns.
- For buyers, there are some good deals right now. Just be sure to use your own agent and compare the whole incentive package, not only the price tag.
- As a seller, lead with what builders cannot offer – mature landscaping, an established neighborhood, and a house that’s ready today, not in 8 months.
