Going To All-Cash Market?

How bad could it get? What else could happen?

The market could deteriorate into a cash-only environment, where the buyers and sellers who can avoid mortgages altogether are the only players left.  If mortgage rates get into the 7s and 8s, the temptation for financed buyers and sellers to wait it out will be overwhelming.

Sellers who are downsizing/leaving town are home buyers who won’t care much about mortgage rates because the only way it makes sense for them to move is to pay cash for their next home. Especially those who are older.

There are plenty in this category, thankfully!


Of those who owned their home free and clear, nearly 78 percent were owned by homeowners aged 55 or older. Not surprisingly, older homeowners are more likely to own their homes free and clear. As the Baby Boomer generation, which is larger than any generation before it, has aged, the share of homes owned free and clear has increased. This gives some hope that while many existing homeowners remain rate locked-in, there is a large cohort of older homeowners who are not. However, older households are typically less likely to move than younger ones, which is especially true as seniors today increasingly age in place. So, while some portion of the free-and-clear inventory will come to market in the next decade, it will likely trickle in slowly.

Free-and-Clear Homeowners May Hold the Key

As demand for homes starts to inch up as we approach spring home-buying season, a key question is, will there be more inventory for those potential home buyers to buy? Existing-home inventory makes up the bulk of available home inventory, and many existing homeowners refinanced into sub-3 percent mortgage rates over the course of the pandemic. But there’s a large group of homeowners who are not deterred by higher mortgage rates—those without a mortgage on their existing home or those with a small remaining balance. These homeowners may hold the key to unlocking more supply and, in turn, more home sales.


Local sales recently have been purchased all-cash about a third of the time. As sales drop further, the percentage of all-cash sales should end up at half or more of the total sales – and help to provide a floor.

What Will It Take?

Jessie says we are in the top 3% of local realtors, which means she is counting 16,000+ agents in the county. She doesn’t include out-of-area or off-market sales, and because we made it into the Compass Top 50, we’re hoping it might mean we’re a little higher. Stay tuned.

In the discussion today, it quickly became obvious how important it is for agents to be able to discuss scenarios and solutions. These days, a buyer-agent will just email an offer to the listing agent, and hope it gets accepted or an easy counter-offer comes back. Any tougher than that and the buyer-agents just turn to their clients and say, ‘what do you think?’ and because no other solution is presented, everyone gives up.

The wicked seller’s market during the last 10-12 years has caused everybody to expect that buyers will just pay the sellers’ price – and if they don’t, then they are called names and declared not serious. Being able to craft these scenarios into sales is where this market will benefit greatly.

It may sound simple to expect agents to discuss offer terms, but don’t underestimate how limited that opportunity is. Not only do people who are used to texting and emailing all day find it a struggle to stitch together a sentence or two in person, they usually have little or no experience with actually discussing offers and how to find a win-win solution. It’s too easy to give up instead.

Frenzy Monitor

The reason for breaking down the active and pending listings by zip code is to give the readers a closer look at their neighborhood stats.

Most areas look healthy (ratio of 2:1 or better), and those in red have very similar to numbers to last spring which was probably the hottest frenzy on record:

The number of pendings has risen 33% in the last month, and the active listings are restrained. There aren’t any signs of panic and there have been some eye-popping sales already this year that makes you think the frenzy conditions are still around.

We are set up for a boisterous selling season, in spite of high prices, high rates, and high skepticism!

The Problems With Comps

The critical point in this video is when the second seller dropped 7% to make the sale after just three weeks on the market……even though that was 10% under the last sale that backed to power lines.

This is what can happen. Did they have bills to pay? Did the agent press them to take it?  We don’t know, yet we consider every comparable sale equally and base our opinions on price alone.

The seller of the $2,225,000 sale had purchased it in 2013 for $1,109,000 and his mortgage amount was under $300,000. What’s a hundred thousand in either direction to him?

The previous high sale of this model was $2,100,000 in December, 2021.

The high sale before that was $1,750,000 in 2020.

The high sale before that was $1,320,000 in 2019.

Are we binary simpletons? Will the next seller and listing agent consider all of these variables? Or just go with $2,200,000 as the latest sale/current value and hope for the best? Or check the zestimate?? 😆

The next sale could go 10% to 20% in either direction, depending on the agent.

All You Get Now

This is the house that received THIRTY offers last month.

My thoughts:

  1. The supply of houses priced under $700,000 is scarce, with overwhelming demand.
  2. This is all you’re going to get from now on, and it won’t get better. I feel sorry for the kids.
  3. My buyers offered $700,000 with 20% down and didn’t get a counter.

The listing agent didn’t round-trip it and the winner paid $730,000 and financed the purchase. How do you know if others would have made a better offer if you don’t include them?

Millennials Buying Homes in SD

Discounts By Days On Market

This is from NYC but it still applies – and validates how buyers everywhere are watching the Days-On-Market very closely, and expecting discounts the longer a listing sits unsold.

An excerpt:

His findings (above) show discounts steadily rising around 2 to 2.5 percent per 30 days on the market until around six months on the market. Then there appears to be an acceleration and discounts rise by 3.5 percent and then nearly 5 percent per 30 days.

Read full article here

Higher-End Pendings Since Jan 1

It’s impressive to see so many high-enders go into escrow this quickly – these are the NSDCC homes listed over $4,000,000 than have gone pending since the first of the year:

Not mentioned above is the listing that hit the MLS on January 3rd, went pending on the fifth, and closed on the 17th – and went back on the market the next day for $620,000 more:


It sold for $5,380,000 in 2019, $5,959,000 in 2014, and $5,650,000 in 2013.

Here are the historical counts:

NSDCC Annual Sales Over $4,000,000
Annual Sales Over $10,000,000

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