The biggest challenge the housing market’s facing is how few homes there are for sale. Mark Fleming, Chief Economist at First American, explains the root causes of today’s low supply:
“Two dynamics are keeping existing-home inventory historically low – rate-locked existing homeowners and the fear of not finding something to buy.”
Let’s break down these two big issues in today’s housing market.
According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):
But today, the typical mortgage rate offered to buyers is over 6%. As a result, many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost. This is a situation known as being rate locked.
When so many homeowners are rate locked and reluctant to sell, it’s a challenge for a housing market that needs more inventory. However, experts project mortgage rates will gradually fall this year, and that could mean more people will be willing to move as that happens.
The other factor holding back potential sellers is the fear of not finding another home to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more homes to come to the market. That’s why, if you’re on the fence about selling, it’s important to consider all your options. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.
These two issues are keeping the supply of homes for sale lower than pre-pandemic levels. But if you want to sell your house, today’s market is a sweet spot that can work to your advantage.
Be sure to work with a local real estate professional to explore the options you have right now, which could include leveraging your current home equity. According to ATTOM:
“. . . 48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”
This could make a major difference when you move. Work with a local real estate expert to learn how putting your equity to work can keep the cost of your next home down.
Rate-locked homeowners and the fear of not finding something to buy are keeping housing inventory low across the country. But as mortgage rates start to come down this year and homeowners explore all their options, we should expect more homes to come to the market.
With mortgage rates still stubbornly high and home prices going up, you may be holding out for prices to fall or trying to time the market for that perfect rate. But h… Read more
Many people are hoping mortgage rates will come down before they buy a home. But will that actually happen? According to the latest forecasts, experts say rates will d… Read more
Some homeowners hesitate to sell because they’ve got unanswered questions that hold them back. But a lot of times their concerns are based on misconceptions, not facts… Read more
Valentine’s Day is all about love, and today, I want to take a moment to express my gratitude to the incredible clients who make my job so rewarding.
This could be the year to sell your house – and here’s why.
Selling your home is a significant financial decision, and finding the right real estate professional to guide you through the process is essential.
For many homeowners, their property isn’t just a place to live — it’s one of their most valuable financial assets. As you approach retirement, tapping into your home e… Read more
Renovating your home is an exciting venture, whether you're looking to update outdated spaces, increase your home's value, or simply make it more functional for your l… Read more
Buying a home is an exciting milestone, but it’s also a significant financial commitment. While most buyers focus on saving for a down payment, there are other costs t… Read more
Want to stay one step ahead of the market? Sign up to be on Dyanna's VIP mailing list to receive exclusive listings, real estate news and a lot more.