The old patterns may not hold.
Rising mortgage rates are supposed to cool markets down, and they’re currently going up faster than they have in decades. But the most recent data shows 54% of homes selling above list price, and the sales-to-list price ratio at 102.5% — both all-time records. It almost goes without saying that markets like New York, San Francisco and Los Angeles remain hypercompetitive.
Part of that story is basic econ: strong demand meets record low supply. Inflation is also an important plotline — with homes appreciating twice as fast as consumer prices rise, a white picket fence makes for a highly effective hedge. But the most underrated factor in this unique market scenario is the sudden prevalence of all-cash offers.
Two years ago, all-cash deals made up just 15% of home sales; today it’s closer to 30% nationally, and as high as 70% in some markets. Simply put, rising mortgage rates don’t matter as much when that many buyers don’t need to borrow money. And all-cash offers may soon become the norm, if they make buyers four times more likely to win.
Put that all together and you have a market that’s been reshaped by larger economic forces, sped up by new transactional trends and seemingly resistant to top-down controls.
Source: The Real Deal