These are the Two Big Issues that the Housing Market is Facing Right Now
The greatest challenge facing the housing market is the lack of homes for sale. Mark Fleming is Chief Economist at First American. He explains why today’s low supply is so important. “Two dynamics keep existing-home inventory historically low – rate-locked existing homeowners, and the fear that not finding something to purchase.”
Let’s look at these two major issues in today’s housing market.
According to the Federal Housing Finance Agency, the average interest rate for homeowners with mortgages is below 4% (see graph below).
Today, however, the average mortgage rate offered to buyers today is over 6%. Many homeowners choose to stay put rather than move to a home with a higher borrowing rate. This is known as being rate locked.
It’s difficult for a market that needs more inventory to function when so many homeowners are locked in their mortgage rates and unwilling to sell. Experts predict that mortgage rates will fall gradually this year, which could lead to more people being willing to move.
Fear of not finding something to buy
Another factor that holds potential sellers back is the fear of not being able to find another home to purchase if they move. Many people are waiting for new homes to come on the market while worrying about where they will go. It’s important to weigh all options if you’re considering selling. This includes newly built homes, especially now that builders offer concessions such as mortgage rate buydowns.
What does this mean for you?
These two issues have kept the supply of homes for purchase lower than it was pre-pandemic. If you are looking to sell your house, the market today can work in your favor.
To explore all options available to you right now, including leveraging your existing home equity, make sure to consult a local realty professional. According to ATTOM
“. . . 48 percent of the mortgaged residential properties in the United States were deemed equity-rich during the fourth quarter. This means that the total estimated loan balances secured on these properties was not more than 50 percent their estimated market value.
This could make a big difference in your move. Talk to a local realty expert to find out how you can put your equity to use to lower the cost of your next house.
Bottom LineLow housing inventory across the country is due to fear of losing their home and homeowners with low mortgage rates. As mortgage rates begin to fall this year, and homeowners look into all options, we can expect more homes to hit the market.
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