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.
Congratulations on your new home! Buying a house is a significant milestone and an exciting adventure. However, homeownership comes with responsibilities, including m… Read more
So you're ready to buy a home. Here are 111 possible to do's to make your dream happen. Or, scroll to the end to see how to make the process so much easier.
Welcome to Essex County, New Jersey, where summer comes alive with a vibrant array of festivals, attractions, water sites, music, and so much more.
Selling your home without the assistance of a realtor might seem like a viable option to save on commission fees. However, navigating the complexities of the real esta… Read more
If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happenin… Read more
If you’re thinking of making a move this year, there are two housing market factors that are probably on your mind: home prices and mortgage rates. You’re wondering wh… Read more
Selling your home is a significant milestone that requires careful planning and decision-making. One of the most crucial choices you’ll make is selecting the right rea… Read more
The number of homes for sale is playing a big role in today’s housing market. And, if you’re considering whether or not to list your house, today’s limited supply is o… Read more
In today’s housing market, more and more single women are becoming homeowners. According to data from the National Association of Realtors (NAR), 19% of all homebuyers… 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.