Who is Buying Real Estate Right Now?

On Friday, we received data about existing home sales. There were a few things that popped out to me:

Housing Prices Comparison

The first data point looks at housing prices in December 2022 vs. December 2021. The numbers show that housing prices were up 2.3%. Obviously, the market has come off the highs (which happened around March & April 2022 before the home prices started dropping again).

We’ll start seeing month-over-month declines in the new few months. Even though we are 10% off of the highs, when you look at the run-up from 2019, it’s clear that the pace was not sustainable. So, coming off that climb and seeing the numbers come down is not surprising at all.

We’ll see where it continues to go.

Demographics of Home Buyers

The next interesting point is the demographics of who is buying real estate right now. For example, all-cash buyers are up to 28% of the market, which is a few percentage points higher than before.

Also, the other noteworthy data showed that first-time home buyers are making up 31% of the buying pool. Anyone who hadn’t owned a home in the last 3 years falls in this category. They can get access to down-payment assistance and other programs.

So, between cash buyers and first-time home buyers, it made up over 50% of the buying pool.

The rest of the market is the typical customers who are moving up or downsizing. People always have to move, so that part of the market is always going to be there. But it makes sense that over half of the market are cash buyers or first-time home buyers, because most existing homeowners likely refinanced at the right time and have a 2- or 3- in front of their interest rates. Which makes the move a little more difficult with the current higher interest rates.

It’s Smart to Watch the Industry Trends

It’s important for us in the industry to understand where the buying pool is coming from. That way, we can adjust the marketing dollars and messaging to speak to people who are ready to buy, based on current trends.

As always, I’m here to help if you have questions. Feel free to reach out any time. I would love to discuss it further – call or message me any time.