All-cash sales have constituted nearly a third of all home purchases nationwide for the last few months. While this is lower than the 40 percent rate of all-cash sales seen in 2012 and 2013, when the recovery started, and buyers began taking advantage of slipping and foreclosed homes in earnest, it’s still far higher than historical rates. In the early 2000s, the percentage of all-cash home purchases nationwide normally hovered around the high teens. Mortgage data shows just how far desperate buyers are willing to stretch to purchase property. Last December more than 20 percent of borrowers spent more than 45 percent of their income on mortgage payments each month, a percentage not seen since the run-up to the Great Recession. Analysis from found that the size of the monthly mortgage payment needed to afford a home rose 5 percent in the first quarter of 2018—and may rise an additional 10 to 15 percent by year’s end. Demographics are destiny for the housing market. Part of the problem for first-time buyers today is the lack of available starter-home inventory. Just as the millennial demographic hits prime homebuying age, baby boomers want to downsize to the same homes young adults want. In Denver we are seeing downsizing empty nesters snap up available inventory, making bids on mid-priced homes and moving back into the city. That stifles move-up buyers, which in turn means less inventory for first-time buyers. Some of the same dynamics play out all over the country with the hottest sector of the market is smaller homes priced between $700,000 and $1.2 million. Those are the homes that see a dozen, sometimes even 20, offers. The break-into market is the one with all the activity and competition, and where all the major bidding wars happen. Buyers need to learn quickly. The list is not going to be the sales price. Don’t get beat up by the illusion; you’ll get resentful. Despite the frustration, and the clear demand for more housing, few observers predict this dynamic will change anytime soon. In a recent statement, Doug Duncan, senior vice president and chief economist at Fannie Mae, said, “the tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely remain a hurdle for mobility and a persistent headwind for home sales.”In San Francisco they want the same thing: a single-family home or condo, priced between $850,000 and $2.5 million. But there are only so many pieces of property in the city that fit that bill. Due to zoning and building restrictions put in place by local government there’s no real relief in sight. Anything we plan to build today, we’re not going to see on the market for three to five years. That’s one of the biggest reasons we’re in such a housing crisis. It’s because of local government, and San Francisco not wanting to see growth happen. And they’re surprised about rising housing costs.