Who doesn’t like more? More food. More free time. More fun. Well, more isn’t always better when it comes to the housing market. New home buyers are paying more and getting less in return. And lowering rates, most likely, won’t solve the problem. |
Speaking of problems, homeowners are now factoring in a major one: natural disasters. From property features to location, buyers are making decisions with climate risk in mind, and investors should take note. Today, we’ll look into this shift, what first-time buyers are up against, and a new strategy for brokers to win more listings. |
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Here's what you need to know today: |
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The housing market isn’t just expensive, it’s increasingly divided. Some homeowners are sitting on sub-4% mortgage rates or have no mortgage at all, while new buyers are facing what is being called a record “entry fee” just to get in. They’re facing higher mortgage rates, elevated home prices, larger monthly payments, and the need to purchase smaller or less desirable homes.
This gap has been widening since 2020. New homeowners are now spending roughly 27% of their income on housing, compared to about 20% for existing owners–the largest divide in at least 40 years. First-time buyers are also putting down less (around 13.8% on average), taking on smaller loans, and still ending up with higher rates and heavier monthly payment burdens.
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This divide is also causing homeowners to decide to stay put. More than half of all homeowners have mortgage rates below 4%, giving them little incentive to sell and receive a higher rate. Due to this, inventory remains tight, competition stays elevated, and first-time buyers continue to face steep financial barriers.
Now you may think this dilemma will be fixed as soon as rates are lowered. But just lowering rates won’t fix the problem. Rate cuts do improve monthly payments and give clients more buying power, but lowered rates also pull more buyers into the market, which in turn drives prices higher, keeping that “entry fee” elevated. Until supply and rates change meaningfully, the gap between those entering the market and those already owning will only widen.
What this means for the market: |
🚧 Demand is there but constrained: First-time buyers want to enter the market, but higher monthly costs and elevated home prices are slowing decision-making, delaying purchases, and leading to canceled transactions. 🔒 Homeowners are staying put: As long as interest rates stay elevated, homeowners holding ultra-low rates have little incentive to sell, keeping inventory tight. 🏘️ More inventory is needed: Until new homes are built, or homeowners start putting their homes on the market, affordability pressures will persist and “entry fees” will stay elevated. |
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Do you think climate risk will continue to influence where buyers choose to live in the next 3-5 years? |
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Are you seeing “HENRY” buyers (high earners, not rich yet) in your market? |
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Buyers are prioritizing durability over design when it comes to their new homes. In California, builders are marketing wildfire-resistant features in their new builds as a selling point. Highlighting ember-resistant vents, enclosed eaves, and defensible space. These features are not only safety upgrades, but also a way to improve insurability and long-term value. In Washington, a home built on 10-foot stilts to withstand flooding recently passed its first real-world test during a major storm. And buyers are paying close attention to these features.
Nearly half of US homeowners say they've considered moving in 2026 due to climate concerns, with 93% worried about damage from extreme weather in the next few years. This year we’ve already seen tornado outbreaks across the Midwest and historic flooding in Hawaii. Buyers are watching these events and factoring them into where they want to live and what home they want to purchase.
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For investors, this changes the playbook. The value-add is no longer cosmetic – it’s structural and geographic. How a property is built and where it’s located are becoming critical to long-term performance. Incorporating features that reduce environmental risk, whether fire-resistant materials, elevation, or site planning, can directly impact buyer demand and exit velocity. Investors need to evaluate where they build or buy based on perceived risk for severe weather events.
The opportunity isn’t just building stronger homes, it’s building smarter in the right places. Markets with lower exposure to extreme weather, more stable insurance environments, and infrastructure built for resilience are becoming increasingly attractive to both buyers and investors. As climate risk continues to shape migration and purchasing decisions, investors who factor in long-term durability and location risk early on will be better positioned to protect margins, maintain insurability, and capture shifting demand.
What investors are prioritizing now: |
- Durability over design: Investors are elevating builds by incorporating fire and weather-resistant materials, aligning with buyers who now value protection and longevity over aesthetic finishes.
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Insurability and long-term costs: With rising insurance concerns, investors are prioritizing properties and builds that are easier to insure and maintain, knowing this directly impacts buyer demand and exit strategy.
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Climate risk evaluations: Location is becoming increasingly important. Investors are evaluating regions based on exposure to floods, wildfires, and severe weather - not just price or appreciation potential.
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🛠️ Add climate-based upgrades to your current or future planned builds
📍 Identify lower climate risk markets attracting buyers 🔍︎ Analyze your current or target market for climate risks |
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When I envision a multi-million dollar residence, I don’t think of an empty white box. Though a “white box” condo at Manhattan’s 200 Amsterdam did just sell for $15 million in New York City. This sale is the first of its kind since 2021, a four-year gap that says a great deal about buyer preferences. The condo is a full-floor residence delivered as a blank slate, with no interior finishes and only core systems in place, spanning almost 4,000 square feet with 360-degree views of Central Park and the Hudson River.
The unit offers complete creative control, but this control did not lead to increased interest. The property sat on the market for 270 days, reinforcing a clear shift in luxury buyer behavior, preferring turnkey properties. While customization sounds appealing, the reality is time coordination, complexity, and extra funds, something many luxury buyers are unwilling to take on. As the listing agent, Peter Zaitzeff, noted to Realtor.com, these white-box sales units are extremely rare, and buyers for them are even rarer.
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The financials needed for a property like this only add to the hesitation. At roughly $3,800 per square foot, the buyer of this condo will likely spend an additional $1,000 per square foot to complete the build-out, bringing total costs in line with or even exceeding those of comparable turnkey units. With construction costs now double or triple pre-2020 levels, the “blank canvas” is no longer a shortcut; it’s a commitment luxury buyers don’t want.
Across global markets, luxury buyers in 2026 are prioritizing turnkey homes that deliver immediate lifestyle, design, and ease. Fully furnished, move-in-ready properties are outperforming because they eliminate friction and offer instant enjoyment. Today’s luxury buyer isn’t looking for a project; they’re looking for a finished experience. |
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| Brokerages are all competing for the same thing:active listings. And the brokerages that are winning these listings understand that inventory doesn’t start when a home hits the market. It starts by creating relationships.
If your brokerage’s strategy only focuses on winning listings once they exist, you’re already behind. The real opportunity is upstream, with landowners, developers, investors, and builders who control what eventually becomes tomorrow’s inventory. Creating relationships at this level gives brokerages early access, off-market opportunities, and long-term deal flow.
We are seeing this shift at the highest level of the industry, with the National Association of Realtors recently emphasizing the need for stronger partnerships with land professionals, stating that if real estate agents want to increase inventory, it starts at the source. This isn’t just about large-scale development either. It applies locally: small builders, lawnowners, and investors in your market are shaping future supply right now.
For brokers, this is a strategy shift. Your agents shouldn’t just be trained to compete for listings; they should be trained to build relationships that create them. Brokerages that think beyond the current market and build relationships with the source of inventory will have a long-term advantage. What’s working right now: |
- Builder and developer outreach: Brokerages are building relationships with local builders and developers to gain early visibility into upcoming inventory and projects. A great way to create these relationships is to host a networking event where you can mingle and discuss your brokerage’s market success and how you can help investors and builders with their future projects.
- Landowner engagement: Train agents to proactively identify and reach out to landowners, building relationships now so they’re first in line when those properties come to the market.
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Relationship building systems: Encourage your agents to intentionally build their own pipelines by equipping them with outreach scripts, marketing examples, and tailored listing presentations to help them initiate and sustain conversations with prospective sellers.
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📈 Mortgage rates jump as spring market begins: CNBC reports mortgage rates surged to 6.53%, the highest since September 2025, potentially dampening buyer momentum despite rising inventory and improving conditions.
🌵 800+ homes proposed near Phoenix: Homes.com discusses a new master-planned community in Maricopa that could bring up to 826 homes, reflecting strong population growth and rising housing demand in the area.
🚫 Inspection issues are a dealbreaker: KCM highlights how over 70% of canceled home sales are due to inspection problems, as today’s buyers have more options and are less willing to overlook repairs. |
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Sophia Doyle is a staff writer at The Close and a licensed New Jersey real estate agent with hands-on experience in residential real estate. Sophia brings real-world insight into today’s housing market, combining on-the-ground agent experience with a strong background in communications. She understands the full transaction lifecycle, from lead generation and client relationships to marketing strategy and deal execution. Through her writing, Sophia delivers clear, practical guidance to help agents navigate an evolving industry with confidence and creativity.
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