Who wins in today’s housing market?

Home prices rose again in June, according to the S&P CoreLogic Case-Shiller index. That’s the fifth straight month of increases. And that’s even with mortgage rates higher than they’ve been since 2001. Add low inventory to the mix and, well, let’s just say these are difficult conditions for first-time homebuyers.

Now, if you can pay cash? Different story.

In today’s housing market, a lot of renters are not renting by choice. Ali Wolf with real estate data firm Zonda said they’re stuck. 

“I’ve never seen a more bifurcated housing market with winners and losers,” Wolf said.

Winners like people who already own homes and are looking to move to cheaper states like Arizona and Texas. And baby boomers who are hitting retirement age.

“Say you own a home and Washington D.C., you paid off your mortgage, you have all cash, you can take that and, you know, put some of it towards a condo in Florida,” said Daryl Fairweather with Redfin.

She said cash purchases, which allow folks to bypass high mortgage rates altogether, are increasingly common. 

“During the pandemic, the share was closer to 1 in 4 homes bought with cash, but now it’s closer to 1 in 3,” Fairweather said.

As for renters looking to buy their first home, or at least the ones who don’t have troves of cash lying around, “it’s tough right now,” said Thomas LaSalvia with Moody’s Analytics. “With less supply, and maybe less of an overall budget because of high interest rates. It really limits you.”

Monthly payments are much higher for people financing a new house today compared to just a few years ago, said Lawrence Yun with the National Association of Realtors. 

“Given that it is much higher mortgage rate, the monthly payment is essentially double,” Yun said.

And these barriers for first-time buyers have a bigger impact, said Zonda’s Ali Wolf. “We’re creating massive wealth inequality in the U.S. just based on who owns a home and who doesn’t.”

She said while U.S. homeowners are sitting on mountains of home equity, renters are increasingly cut out of the market.