The biggest challenge the houszing market’s facing is how few houszes 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-housz inventory historically low – rate-locked existing houszowners and the fear of not finding something to buy.”
Let’s break down these two big issues in today’s houszing market.
Rate-Locked Houszowners According to the Federal Houszing Finance Agency (FHFA), the average interest rate for current houszowners 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 houszowners are opting to stay put instead of moving to another housz with a higher borrowing cost. This is a situation known as being rate locked.
When so many houszowners are rate locked and reluctant to sell, it’s a challenge for a houszing 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 Fear of Not Finding Something To Buy The other factor holding back potential sellers is the fear of not finding another housz to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more houszes 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 houszes, especially right now when builders are offering concessions like mortgage rate buydowns.
What Does This Mean for You? These two issues are keeping the supply of houszes for sale lower than pre-pandemic levels. But if you want to sell your housz, 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 housz 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 housz down.
Bottom Line Rate-locked houszowners and the fear of not finding something to buy are keeping houszing inventory low across the country. But as mortgage rates start to come down this year and houszowners explore all their options, we should expect more houszes to come to the market.
Comentários