Pending Home Sales Are Stuck In The Mud
More “bad news” for the housing market. . .if you see the glass as half empty.
From my perspective, the cup runneth over.
Pending home sales barely moved in August. Just +0.3% from July.
But they were still down 4.7% from a year ago and are running roughly 30% below pre-pandemic levels.
Meanwhile, existing-home inventory has climbed to 1.62 million homes.
That’s 4.9 months of supply, the highest level in more than a decade.
And mortgage rates start today at 7.2%
Do the math: more houses + fewer buyers + high borrowing costs =
Sellers who cannot get their houses sold the old-fashioned way.
When traditional transactions stop working, somebody has to find another way to make the numbers work.
Maybe the seller doesn't need to sell today. Maybe they need income. Maybe they need their asking price.
Or they need to move but don't want to become a landlord.
Perhaps the buyer can't qualify for today's mortgage.
That's where creative real estate comes into the picture.
Lease options
Cooperative Assignments
Seller financing
Different problems require different solutions.
The point isn't to force a deal into the traditional “buyer gets mortgage. . .seller gets cash. . . transaction closes” box.
Instead, ask
“What does each party actually need, and is there another way to structure the deal?”
The worse the conventional market gets,
the more valuable creative thinking becomes.
That's not necessarily bad news at all.
Most Popular Reply
#1 Wholesaling Contributor
- Englewood, NJ
Michael, seeing this from down here in Broward County and you nailed it about creative solutions. The conventional market IS stuck - pending sales here are no different than what Rob is seeing in Louisville.
But here's what's interesting on the ground: the properties that CAN'T sell through traditional channels are creating opportunities elsewhere. I've been buying at tax deed auctions locally and the amount of distressed inventory coming through is directly tied to this exact problem - owners who can't sell at the price they want, stop paying taxes, and eventually the county takes it.
Jay's point about the 70s and 18% rates is spot on. Everyone who got used to 3% money is acting like this is unprecedented. It's not. What IS different is that today's stalled sellers have way more equity than they did back then, which means there's room to make deals work if you approach them with the right structure.
The creative toolbox Michael mentioned - seller finance, lease options, subject to - those aren't backup plans anymore. In this rate environment they're becoming the primary deal structure for a lot of investors who can't get traditional financing to pencil.