The Two Big Issues the Housing Market’s Facing Right Now
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.
Stay up to date on the latest real estate trends.
David's East Bay experience, creativity, and dedication to his clients made him a perfect fit for Elevation Real Estate
San Francisco's single-family home market continues to reach new heights, with the median sale price climbing 22.56% year-over-year to $2,200,000. This marks one of th… Read more
Prices are on the rise across the board, with single-family homes and condos both posting year-over-year gains for the first time in over a year.
Median sale prices continue their remarkable ascent, with single-family homes up more than 21% and condos up more than 18% year-over-year.
After several months of relative stability, single-family home prices in the East Bay showed some softening in April.
May 9th | 10AM - 1PM | 4 Norwich Street, San Francisco
Median sale prices are soaring in San Francisco, with condos up more than 27% and single-family homes up more than 18% year-over-year. Inventory levels remain more tha… Read more
Single-family homes are selling at a blistering pace, with the average listing moving in under two weeks.
February brought extraordinary price appreciation to San Francisco, with both single-family homes and condos posting impressive year-over-year gains. Single-family hom… Read more
You’ve got questions and we can’t wait to answer them.