The Two Big Issues the Housing Market’s Facing Right Now
Two dynamics are keeping existing-home inventory historically low – rate-locked existing homeowners and the fear of not finding the right property.”
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.
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. 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.