Cash is king: High mortgage rates are changing home buying trends

2024 was a challenging year for potential home buyers. Limited housing inventory, historically high interest rates and inflated home prices have created barriers for those hoping to buy an affordable home this year.

Although 30-year fixed-rate mortgages have hovered between 6% and 7% over the past 12 months, experts anticipate rates will continue to fall. CME FedWatch predicts that the Federal Reserve Bank will cut interest rates twice by the end of 2024.

While a September cut is widely expected at the upcoming Federal Reserve Board meeting, a further rate cut could improve consumer confidence in the housing market.

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Lack of affordability has led consumers, especially young buyers, to explore home shopping. 26% of buyers purchased a home with a friend or family member, and 44% of all buyers cited affordability as the top factor for co-buying.

TheStreet spoke with Ryan Serhant, real estate broker, TV personality and CEO of SERHANT, about the real estate market in 2024 and how consumers are adapting to the new challenges.

Real estate market trends in 2024

The increased demand for housing has created a highly competitive market where cash offers are becoming the most effective way to purchase a home.

“Cash is king,” Serhant said. “Pre-Covid in New York City, you’d have 30% to 35% of shoppers paying cash, regardless of whether they were doing a technical repair after closing. Today, it’s around 70%.”

While this trend is prevalent in big cities, cash-only deals are on the rise nationwide. The National Association of Realtors found that as of January 2024, 32% of home sales are in cash.

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With strong market demand and the fact that one in three (29%) homebuyers are single, it’s easy to see the appeal of sharing the costs with someone you trust.

Serhant explains the recent interest in co-buying among younger customers.

“If you have a lot of money, the housing market will favor you, albeit unfairly,” he explained. “We’re starting to see younger shoppers coming in line and buying together. If you would have talked to me about people shopping together ten years ago, even three years ago, I would have said that it is a very difficult thing to do. Now it’s becoming more and more common.”

A couple is celebrating buying a new home.

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Buying homes together helps younger buyers build wealth

Despite a challenging market, Serhant reveals how home ownership offers ways to build wealth for the younger generation.

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“You’ll see two young people looking at rents and saying, ‘Okay, rents are going up 3% to 10% a year — let’s go buy something together.’

“Home ownership is a path to wealth, especially in the United States,” he continued. “It always has been and that will not change. If buyers can get a lot of money by pooling their money instead of being roommates on a rental, they can be roommates on a house they buy together.”

“There are different legal structures that make co-buying enjoyable for everyone, so we’re seeing that more and more. In New York City, even apartments with strict councils and regulations are booming.

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