Cashing in on Housing Turmoil

There are a lot of signs that the housing market is in a period of  turmoil. Mortgage volume is plummeting, people are backing out of purchase agreements, and renters are reportedly being forced to move back in with their parents. That said, it’s not all bad news. For example, homeowner equity continues to grow and the overall rate of homeownership continues to rise. 

One interesting data point is the number of homes bought with cash. Q1 this year had the highest number of cash sales since 2005. Perhaps this was driven by cash offers being a quick way to secure a sale at a time when houses were often off market in mere days. The past six months have seen fewer total cash sales, but keep in mind that the overall number of home sales also fell. 

As a proportion of home sales, cash purchases have actually risen every quarter this year reaching just under 11% in Q3. The last time cash sales were so prominent was in 2014. 

There have been a few viral articles claiming inflation has pushed more renters toward moving back in with their parents or seeking a roommate to split the costs with. Google Search Trends would suggest there is some merit to these claims as search activity for “Roommate” has been higher for most of this year compared with one year prior with a particularly pronounced spike in searches back in March. 

Homeownership rates for third quarter ticked upward to 66%. This rate is given as a proportion of households that are owner-occupied. Though we cannot say definitively if this is the cause (in fact its likely not), if young people move back into their parents’ house from an apartment, would they not  be part of an owner-occupied household? Just a thought. 

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