In the midst of an evolving mortgage landscape, a growing number of homeowners seem ready to take the plunge, moving homes even with the challenges of higher rates. This insight comes from a recent Redfin analysis, suggesting a subtle yet significant shift in the housing market.
In a remarkable shift from mid-2022's record, where 92.8% of homeowners enjoyed low rates, recent data shows a slight decrease. By the third quarter of 2023, the percentage of U.S. homeowners with mortgages under 6% dipped to 88.5%. This data, drawn from the Federal Housing Finance Agency’s National Mortgage Database, hints at changing homeowner behaviors.
Life's big changes – like marriages, births, career moves, or divorces – often inspire the decision to sell. Some homeowners are simply seeking a new environment or city. Another factor in this trend shift is the segment of homeowners with rates over 6%. Particularly, those who ventured into the market in 2022 faced average mortgage rates exceeding 6%. With current rates on the decline, it's increasingly appealing for these homeowners to consider a new mortgage.
The phenomenon known as the ‘lock-in effect' is still a reality, yet we're seeing a gradual increase in listings. The average 30-year fixed-rate mortgage, which stood at a daunting 8% in October, has since fallen to 6.66% as of January 11.
David Palmer, a Redfin Premier agent in Seattle, observes, “Homeowners are emerging, partly because it’s a new year, and partly because mortgage rates have softened. The realization that rates won’t quickly return to 3% is nudging more to sell. Yet, the ongoing housing shortage keeps many hesitant. The struggle to find a new home is real, keeping potential sellers cautious.”
A notable group of homeowners, buoyed by significant equity gains during the pandemic, find themselves in a position to sell and accept a higher mortgage. Many have seen substantial returns on their investments, making it a strategic move to sell now, especially for those looking to downsize or relocate to more affordable areas. As of the third quarter of 2023, the majority of mortgaged homeowners still enjoy rates below 6%, with a significant portion below even 4% and 3%.
Despite the downtrend in mortgage rates, affordability remains a concern. For example, as of early January 2023, the monthly payment on a median-priced home, at an average rate of 6.62%, was $2,399. Although this is a decrease from 2022's peak, it represents a 7.4% increase from the previous year. It's clear that both mortgage rates and home prices are higher than before, impacting affordability and influencing homeowner decisions.
I hope you have found this blog post super helpful. If there is anything else we can do for you, including helping you sell (or buy) a home, I would be honored to assist. I hope you have a great day/evening. Cheers, E + J.
We are so happy you found our little corner of the interwebs. We look forward to y'all reaching out to us. We love to answer questions and welcome them. Recently we created some local maps, and you can download those by clicking the image/link above. Below, you will find an index of some very helpful information to assist you in learning more about the Houston suburbs. If you are relocating to our neck of the woods, we hope you reach out to us, because we would love to help you by being your local realtor and friend. Thoughtfully written for you. Hugs, Jo.
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