Ryan Serhant, CEO of SERHANT, says there isn’t just 1 housing market right now. There are really 4: cash buyers, buyers who need a mortgage, homeowners with low mortgage rates, and builders.

Today, let’s zoom in on the 1st group – cash buyers.

According to the National Association of Realtors (NAR), 27% of homes sold in September were bought with all cash. That’s more than 1 in 4 buyers. And that’s a pretty big number, especially when so many people are struggling with affordability.

So where is all that cash coming from? When you hear a number like that, it’s easy to picture wealthy investors buying up houses left and right. But that’s not necessarily the case. Some of those cash buyers are actually homeowners who’ve built up enough equity to buy their next home outright.

Here’s what you should know about who’s paying cash and what that really means for the market.

Who’s Paying Cash?

Cash buyers tend to fall into a few groups, according to NAR:

• Homeowners who sold a house and are using that money to buy their next one

• People buying a 2nd home

• Investors

So, it’s not all those big investors social media talks about. That 1st group may include people a lot more like you. Here’s how. According to Cotality, the average homeowner with a mortgage has about $310,000 in equity.

That’s a big deal right now. Many homeowners feel stuck because they don’t want to give up the low mortgage rate they have today. But once they learn they may have enough equity to move and pay cash for their next home, today’s rates don’t matter nearly as much. Because buying in all cash means…

• No monthly mortgage payment

• No need to borrow at today’s mortgage rates

• No loan approval process, so you may be able to close faster

And even if the equity won’t cover the whole purchase, putting more of it toward the next home means borrowing less. That can mean a smaller monthly payment, too.

But cash buyers like this are more common in some places than others. And how big of a segment of your local market this is, is going to depend on where you live.

For example, Realtor.com data shows cash buyers made up almost 47% of sales in Mississippi and 46% in Montana earlier this year (see map below).

Where does your state fall?

According to Realtor.com, the states with the most cash buyers reflect “a mix of affordability, wealth and buyer demographics.” Think places with lower home prices, or lots of retirees and 2nd-home buyers.

So, depending on where you live, you may see a lot more (or a lot fewer) cash buyers than the national number suggests. An agent who knows your area can tell you who’s actually buying near you.

Most Buyers Are Still Using a Mortgage

And if all of this has you thinking everyone’s paying cash, they’re not. If you’re planning to buy and need a mortgage, you’re actually in the majority.

Based on NAR’s numbers, nearly 3 out of 4 home purchases still involve financing. And for homes priced between $200,000 and $750,000, only about 1 in 5 sold for cash, according to Realtor.com (see graph below):

That means most people buying in that price range are financing their purchase, too. So, there’s no need to assume you’re at a disadvantage just because you’re using a loan.

Cash Buyers and Your Move

So, what does all this mean for you? Maybe more than you think.

If you already own a house, you may have enough equity to make your next move more affordable than you realize. And if you’re buying with a mortgage, remember, you’re in good company. Most buyers are financing their purchases, too.

The takeaway? Don’t make assumptions about what’s possible based on how other people are buying homes. What really matters is your equity, your budget, and what’s happening in your local market.

Bottom Line

Cash buyers are a meaningful part of today’s market, but they aren’t the whole market.

Whether you’re hoping to put your equity to work or you’re buying with a mortgage, a local real estate agent can help you see how much equity you have, who’s buying in your area, and what that means for your next move.

Here’s something most homebuyers don’t think about. When the housing market slows down, homeowners and builders don’t always respond the same way.

Think about it. If you’re selling your house and aren’t getting the offers you want, you could make the choice to take it off the market and stay put, and wait for things to improve.

But builders? They may be more motivated to stay the course.

They’ve already invested money in building those houses. And every completed home that sits unsold means money tied up in a property, plus ongoing costs that can add up.

That’s why some builders may be more motivated to negotiate right now. And that could work in your favor.

Fewer Buyers Are Making Moves. And Builders Are Feeling It.

You’ve probably seen the headlines. According to the latest report from the National Association of Realtors (NAR), pending home sales – homes that have gone under contract but haven’t closed yet – fell 7.3% in September and 11.3% compared to last year.

Why? Higher mortgage rates are making it harder for buyers to make the numbers work. Now, that report tracks existing homes, not new construction. But we’re seeing signs of the same slowdown on the builder side, too. 

According to the National Association of Home Builders (NAHB), builder confidence dropped to 29 in October, its lowest level since June 2012. Traffic from prospective buyers also dropped to its lowest level in more than a decade, excluding the start of the pandemic.

As Robert Dietz, Chief Economist at NAHB, explains:

“Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines.”

Here’s why that matters for you. 

A homeowner may be able to wait for the right offer. But a builder with several finished houses sitting unsold may have more reason to get those homes sold sooner rather than later.

And that means they may be more willing to work with you than you think.

Builders Are Already Making Moves To Win Buyers Over

If you’ve always assumed builders don’t negotiate, take a look at what they’re actually doing. According to the latest survey from NAHB, in October:

• 65% of builders are offering sales incentives.

• 43% are cutting prices, the highest share recorded between 2020 and 2026.

• And 6% is what they’re typically taking off the price.

So, yes. Builders absolutely do negotiate. And with demand slowing, there’s good reason to explore just how flexible they may be right now.

That could mean asking for a lower price. But it could also mean asking for a mortgage-rate buydown, help with closing costs, or upgrades that would otherwise cost you extra. 

And here’s a tip that could make a real difference.

Don’t just look at the newest communities or the prettiest model homes. Look for builders with completed houses that haven’t sold yet.

Those are sometimes called quick move-in homes or spec homes. And the longer one of those move-in ready homes sits unsold, the more reason a builder may have to consider an offer that helps get it off their books.

Don’t Just Ask What’s Available. Ask What’s Negotiable.

Don’t assume the advertised price or incentive package is the best they’ll do.

This is where having your own agent can really pay off. An agent who knows the local market can help you compare what builders are offering, identify communities with more available homes, and understand where there’s room to negotiate.

Of course, not every builder will offer the same incentives. And some may be more flexible on closing costs or mortgage rates than on the price itself.

But that’s exactly why it pays to ask. 

The trick is knowing where to look, what to ask for, and how much room there may be to negotiate. And that’s where having your own agent is key.

Bottom Line

A homeowner who isn’t ready to accept a lower offer may be able to wait. But a builder with finished houses to sell has a different set of priorities. And that could work in your favor.

If you’re ready to buy, talk to a local agent about which builders have completed homes sitting on the market in your area see what they’re willing to offer to get them sold.

When mortgage rates climb, buying a home can start to feel like trying to hit a moving target. Every jump in rates makes monthly payments bigger, and that pushes a lot of buyers to look for another way in.

More and more of them are finding it in the adjustable-rate mortgage, or ARM.

The ARM Option  

Here’s how an ARM differs from a more traditional mortgage. With a regular fixed-rate mortgage, your rate stays the same for your whole loan. But with an ARM, your rate is locked for the first few years, then it can move up or down based on market conditions.

Some people don’t like that level of uncertainty – and that’s okay. But others are drawn to this option specifically because there’s usually a lower rate to start when you opt for an ARM. And in an affordability-strapped market, that’s going to gain popularity. 

Bankrate recently found that, in September, rates for ARM products were over a full percentage point lower than a regular fixed-rate loan. Depending on the ARM product, that can make a difference of $150-300 in the monthly payment on a median-priced home. 

And for some buyers, that’s enough to turn “not right now” into “let’s do this.” You can see it in the numbers. Data from the Mortgage Bankers Association (MBA) shows that, in October, roughly 1 in 10 people applying for a mortgage chose an ARM (see graph below):

If you think you may want to consider this yourself, here’s what you need to know about how it works.

The 5/1 ARM

An ARM is like a phone or cable plan that has an introductory deal for new customers. You start out at a lower price, and then it adjusts after a specified amount of time. A popular loan is the 5/1 ARM.

The “5” means your introductory rate is locked for the first five years, and the “1” means that the rate can change every year after that. The rate change is called the “reset.” And here’s the really important part.

When your rate resets, your mortgage payment could go up or down. The good news is that most ARMs have caps, which are limits on how much your rate can rise each year and over the life of the loan. But either way, you have to be ready. 

The Upsides and Potential Downsides

To see if this type of loan may be right for you, here are some things to think about and discuss with your loan officer:

Before you decide, ask your lender to work up the numbers and walk you through the different potential scenarios you could run into with an ARM. That way, you go in with your eyes open.

Be Ready for the Reset

And, if you do go with an adjustable-rate mortgage, just know that you’ll have choices when the reset time arrives. You could:

• Do nothing and keep your loan in place if the new payment still fits your budget.

• Refinance into a fixed-rate loan with a payment that never changes.

• Refinance into another ARM with a new lower rate locked for a specified timeframe.

• Sell your home.

• Talk to the loan servicer about assistance or modification.

Remember, a refinance is a brand-new loan that you’ll have to qualify for – even if it’s on a home you already own. So, keep tabs on your credit and debt levels and ask your loan officer how major financial moves like job changes and major purchases will affect your mortgage readiness. It’s important to keep your credit and finances in “mortgage shape.”

Today’s ARMs Aren’t Like 2008

One more quick note. ARMs got a bad name after the financial crisis of 2008. Back then, there were some risky loans with small starting payments that later shot way up. Others let people borrow without proving how much money they earned.

But now, there are new laws to protect both borrowers and lenders. The biggest change is the Ability-to-Repay Rule, which says that before a lender makes a home loan, it has to check real paperwork (like pay stubs, W-2 forms, and tax returns) to make sure you can afford it. The lender also has to look at what your payment could be after the reset, not just the low starting payment. 

So, you don’t have to worry that today’s ARMs are the same as the ones we saw back during the crash.

Bottom Line

Today’s market has more options than many people realize. Finding the right one could be as simple as getting more information about tools like ARMs. A trusted lender can run the numbers with you, walk you through the what-ifs, and help you explore the possibilities.

Is an ARM a good option for you? Talk to a loan officer to find out.