While mortgage interest rates have risen from their all-time lows in recent years, the share of all cash buyers is growing. All cash home buyers have trended up significantly in recent months. In January 2024, all cash buyers now stand at 32% of home sales. The last time the share of all cash buyers was this high was June 2014.

So, who are these home buyers? Data from the last six months of the REALTORS® Confidence Index shows they are more likely to be vacation buyers and investors. However, primary residence buyers are actively purchasing using all cash.

Looking at primary residence buyers, all cash purchases have increased in the last two years. These housing consumers owned a home, sold it, and then they could purchase their next property without a mortgage. The freedom to make this purchase was likely due to the large amount of housing equity they have earned as home prices have increased in recent years.

In 2003, just 10% of repeat primary residence home buyers were able to make an all cash home purchase, while in 2023, 26% of repeat buyers were able to skip a mortgage payment. This remains uncommon among first-time buyers. However, 6% of first-time buyers made an all cash purchase in 2023 compared to 4% in 2003..

Aside from the housing equity, one explanation for these primary residence home buyers to be able to pay all cash is they are more likely to move long distances. For all cash primary residence buyers, they moved a median of 60 miles, with 29% moving 500 miles or more. In comparison, among those who financed their home purchase, only 16% moved 500 miles or more, and the median distance moved was just 18 miles. While long-distance moves were most popular during the beginning of the COVID-19 pandemic, they are still occurring, especially among retirees and those able to work fully remotely.

Home Inventory Expected to Improve as Mortgage Rates Decline

U.S. existing-home sales slipped 1.0% month-over-month and were down 6.2% year over-year as of last measure, while pending sales jumped 8.3% from the previous month, marking the largest gain since June 2020, according to the National Association of REALTORS® (NAR). Mortgage rates have dropped significantly from their peak last fall, and homebuyers are beginning to come out of the woodwork, with NAR forecasting a 13% increase in existing-home sales this year compared to 2023.

New Listings were up in the Charlotte region by 10.1 percent to 3,567. Pending Sales increased 1.8 percent to 3,554. Inventory shrank 6.6 percent to 5,554.

Prices moved lower as Median Sales Price was down 0.8 percent to $371,853. Months Supply of Homes for Sale was up 6.7 percent to 1.6 months, indicating that supply increased relative to demand.

With interest rates backing off in the last few months more people are interested in buying a home in the Queen City.

• The buyers are still here. The number of people moving here continues to grow. It’s still a very popular market since interest rates have started to come down….That also means demand could pick up sooner rather than later!
• There’s a lot of buyers that would have waited until March or April,” Hoffman said. “They’re starting to pull the trigger now, if the home is flawless if the home is priced right.”
• If a home is not flawless, opportunities can still be had with a little sweat equity. Homebuyers will save some cash if they don’t mind making some upgrades to a property after moving in.
• ATTENTION!! The rest of 2024 sales will include homes that are in great shape and sell fast, and sometimes even in bidding wars. Then homes that need work are just going to keep going down, below market value. This opens the buyer pool up some, if you cannot compete in bidding wars don’t be discouraged, search for homes that need some sweat equity and been on the market 30+ days and buy below market value! There are a few home loans that will roll renovation costs AND the home loan all into one!
• On the seller’s side of the coin, I recommend that sellers not put their homes on the market unless the home is already turnkey.
• I’m going to encourage sellers regardless if they’re ready now or if they want to wait, I would encourage you to watch your neighbors, If your neighbor goes on the market, hold off until it sells. Less competition will make the home sell faster…continue reading