New: 🧠 Market Minds Issue #086

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Cash Isn’t King Anymore (But Some Areas Might Be)

Less Cash, More Conviction

All-cash deals, the hallmark of seasoned investors, just hit their lowest level since 2008. But don’t mistake that for a retreat. Investors are still buying, they’re just swapping briefcases of Benjamins for mortgage approvals. Over 62% of investor deals were still cash, nearly double the all-buyer average, but the trend is clear: even investors are stretching for leverage in a tight capital environment. Why? The market's softened just enough to let more of them in, and inventory is the bait.

Kansas: The Heartland’s Hidden Yield

Forget the coasts. Kansas just leapfrogged the competition with 4.9% rent growth, while national rents dipped. That means investors are netting yields north of 6%, a number that gets you laughed out of a broker’s office in LA. The affordability ratio is teetering. Locals are spending more of their income on rent, but investors are cashing in on this imbalance. And Kansas City is the eye of this storm. A market that still lets you buy a multifamily at a rational cap rate? Welcome to Norman Rockwell’s portfolio.

Inventory: The New Gold

States seeing the sharpest investor gains: Delaware, Ohio, DC, Hawaii, Nevada. And they all have one thing in common: inventory starvation. Investors love a captive audience. When renters can’t graduate to homeownership, they stay put. Places like Wyoming and Montana are still coasting off the COVID price bump, but with little inventory and in-migration continuing, landlords don’t need to squint to see their margins widen.

Top Dog States with Low Price, High Potential

Missouri tops the list with 21.2% investor share, followed closely by Oklahoma and Kansas. These aren't coincidences; they're low-entry, high-yield markets where property taxes are manageable and tenant demand is real. Investors aren’t chasing appreciation anymore. They’re hunting for yield, and the Midwest and South are where it’s hiding in plain sight.

“Date the Rate” is Getting Divorced

The Slogan That Aged Like Milk

“Marry the house, date the rate” sounded cute in 2021. But now, the phrase is about as comforting as a balloon payment. What was pitched as a short-term commitment to high rates has turned into a long-haul relationship that borrowers never signed up for. Refinancing? Not happening. Buydowns? Expired. Meanwhile, insurance and tax bills are eating away at household liquidity like termites in a subfloor.

Unrealized Expectations, Unsustainable Payments

The real issue wasn’t just the rates, it was the psychology. Buyers pushed budgets under the assumption rates would drop. They didn’t. Many are now locked into mortgages that consume 45% of their income, with little flexibility for life’s inevitable curveballs. The result: house-rich, cash-poor, and stressed-out borrowers.

There’s No Magic Rate Wand

ARMs, interest-only options, or discount points? They exist, but none are silver bullets. No bank is offering some hidden, golden refi opportunity. The phrase “date the rate” sold a lie that rates were guaranteed to fall.

Creative Doesn’t Always Mean Comfortable

Some borrowers have taken advantage of equity to consolidate debt, sure. But the smarter originators are skipping slogans and focusing on long-term payment feasibility. Buydowns, especially the popular 2/1, require a brutally honest conversation about what happens when the training wheels come off.

Affordability Is at a 25-Year Low, But Expectations Are at a High

Rates aren’t the only culprit. Lifestyle inflation (phones, streaming, tech) has crept in alongside housing costs. The financial elasticity of most households is gone. The new math of affordability isn’t just mortgage plus utilities; it’s mortgage plus monthly Amazon Prime, iCloud storage, and your kid’s Roblox habit.

Serhant’s 5-Alarm Forecast

Stability Is the New Surge

Home price appreciation has shifted from warp speed to cruise control, with forecasts dialing in at 2.9% growth next year. Serhant isn’t hitting the panic button, he’s framing it as a calculated pause. This moment isn’t a downturn. It’s a tactical window. Buyers can move strategically now before rate drops reignite a seller’s market frenzy.

Sellers Are Losing Home Field Advantage

Only 28% of homes are selling over asking (the lowest rate since spring 2020). Sellers are still operating in yesterday’s market. You already know that means one thing: the outcome hinges on precision. Pricing isn’t a guess. It’s a weapon. And presentation? Not a luxury. It’s the lever that justifies every dollar.

From Boardroom to Bedroom: Office Conversions Are the Quiet Gold Rush

New York is about to shed 16.5 million square feet of office space, most of it reimagined as residential. The hybrid lifestyle isn’t going away. Conversions will create a new class of inventory, and the first in will define pricing for the next decade. Scout it now, or wish you had later.

Rental Pressure Is Back, With a Legislative Twist

Rents are set to climb 5–10% annually, and even higher in cities like NYC. The FARE Act may cap lease-to-lease hikes, but landlords are getting smarter. They're front-loading rents, scaling back upgrades, and shelving new development. That means tighter inventory and even more upward pressure on rental pricing — a domino effect worth tracking, especially in urban cores.

Coastal Markets Are Waking Up (Again)

Beach towns are seeing a resurgence as investors chase lifestyle markets with upside. The play isn’t chasing the obvious names, it’s getting ahead of the crowd in the next undervalued stretch of shoreline. Lifestyle migration isn’t a COVID-era fad. It’s become embedded in buyer psychology.

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TL;DR (Too Long; Didn’t Read)

Investor behavior is shifting: cash deals have dropped to their lowest since 2008, but investors are still buying—just with more financing and a focus on high-yield, low-cost markets like Kansas and Missouri. The “date the rate” mindset has backfired, leaving many buyers locked into unaffordable mortgages with no realistic path to refinancing. Home prices are stabilizing, not crashing, offering a strategic window for buyers as sellers lose their pricing power. Meanwhile, rents are rising again, office-to-residential conversions are gaining momentum, and lifestyle migration continues to drive demand in overlooked coastal and heartland markets.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team