“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, according to FreddieMac, 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 commonly referred to as being rate locked.
With so many homeowners being 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 as that happens it could mean more people will be willing to sell and buy a new home.
The Fear of Not Finding Something To Buy
The other factor holding back potential sellers is the fear of not finding another home to buy if they move. The low housing inventory nationwide has many sellers worrying about where they’ll go and 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.
What Does This Mean for You?
These two big issues the housing market is facing right now 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. I’d love to work with you 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 the two big issues the housing market is facing that 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.
Bay Shores Real Estate is here to guide you through the home selling and buying process as well as show you how you can put your home’s equity to work to help control the cost of your next home. Let’s connect if you’re thinking of selling your house and want to learn more about the current conditions in our area.