It’s A Tough Time For Homebuyers … But For Others, It’s Impossible To Sell

Whether you’re in the market for real estate or not, you’ve certainly heard some of the complaints from folks who are shopping around for a home. Mortgage rates are at heights we haven’t seen in a long time and home values have soared in recent years, meaning that the once-ubiquitous aspect of the American dream is slipping out of the grasp of many working-class families.

But there’s another side to this coin. Homeowners with low fixed-rate mortgages say it just doesn’t make sense to sell, even if they want to.

The pandemic divide

Like many complexities at play in the current economy, COVID-19 is a contributing factor. Stimulus money was flowing freely during the pandemic and rock-bottom mortgage rates were widely available. Now, many of the people who took advantage of the opportunity to buy are having second thoughts.

And data from the Federal Housing Finance Agency has puts the situation in stark focus:

• Roughly 1.3 million fewer homes were sold nationwide between spring 2022 and the end of 2023.
• About 70% of mortgage holders had a rate more than 3 points lower than the average current market rate.
• At no time between 1998 and 2020 did more than 40% of locked-in rates undercut the market by more than 1 point.

Inflation complications

Now that we live in an era of rapidly increasing prices (and rates), those with sub-3% fixed rates are in great shape, at least on paper. It’s an asset that currently translates to roughly $50,000 — or more than $500 a month — based on current trends.

But it’s also trapping those borrowers in homes, jobs, and communities that they might otherwise want to leave.

So whether buying a home, selling one, or both is on your agenda, you’re not alone if you’re feeling stuck.

Chris Agee April 16th, 2024

Share this story: