Who is buying homes with cash? According to NAR, 27% of homes sold in September were all-cash purchases. Many of those buyers are homeowners using equity from a home they sold, along with second-home buyers and investors.
Ryan Serhant, CEO of SERHANT, describes today's housing market as four markets in one: cash buyers, buyers who need a mortgage, homeowners with low rates, and builders.
Let's focus on the first 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, a big number when so many people are dealing with affordability.
It's easy to picture wealthy investors buying up houses. But many cash buyers are regular homeowners who've built enough equity to buy their next home outright.
Who's Paying Cash?
According to NAR, cash buyers tend to fall into three groups:
Homeowners who sold a home and are using that money to buy the next one
Second-home buyers
Investors
That first group may include people a lot like you. According to Cotality, the average homeowner with a mortgage has about $310,000 in equity.
In San Diego County, where many homeowners have owned for years and values have grown, that equity can be even more significant.
Why Equity Changes the Math
Many homeowners feel stuck because they don't want to give up their low mortgage rate. But if your equity covers your next home, today's rates matter much less. Buying with cash means:
No monthly mortgage payment
No borrowing at today's rates
No loan approval process, so you may be able to close faster
Even if your equity won't cover the whole purchase, putting more of it down means borrowing less and a smaller monthly payment. That's often the path for move-up buyers and downsizers here in San Diego.
Cash Buyers Vary by Market
How common cash buyers are depends on where you live. Realtor.com data shows cash buyers made up almost 47% of sales in Mississippi and 46% in Montana earlier this year.
Realtor.com attributes those differences to affordability, wealth, and buyer demographics. Places with lower prices, more retirees, or more second-home buyers tend to see more cash sales.
So your neighborhood may see more, or fewer, cash buyers than the national number suggests. Price range and property type make a difference too.
Most Buyers Still Use a Mortgage
If you're buying with a loan, you're in the majority. Based on NAR's numbers, nearly 3 out of 4 home purchases still involve financing.
And according to Realtor.com, only about 1 in 5 homes priced between $200,000 and $750,000 sold for cash.
Using a loan doesn't put you at a disadvantage. A strong pre-approval and a well-written offer still go a long way.
What This Means for Your Move
If you own a home: You may have more equity than you realize, and it could make your next move more affordable, whether you're moving up or downsizing.
If you're buying with a mortgage: You're in good company. Most buyers are financing too.
Don't make assumptions based on how other people are buying. What matters is your equity, your budget, and what's happening in your local market.
Frequently Asked Questions
How many homes are bought with cash?
According to NAR, 27% of homes sold in September were all-cash purchases.
Can I buy my next home with cash from my equity?
Possibly. The average homeowner with a mortgage has about $310,000 in equity, according to Cotality. Your equity depends on your home's value and what you owe.
Am I at a disadvantage if I need a mortgage?
No. Nearly 3 out of 4 purchases still involve financing. A solid pre-approval and the right offer strategy keep you competitive.
Let's Look at Your Numbers
Cash buyers are an important part of today's market, but they aren't the whole market. Whether you want to put your equity to work or you're buying with a mortgage, call or text me and let's look at how much equity you have and who's buying in your area.
Billie Bourgeois | REALTOR® Real Broker | San Diego County, CA DRE# 01703336
