It should come as no surprise that new listings fell this week along with the snowfall. But it is encouraging that coming soon listings popped up again, and pending sales held their own… along with multiple offers.
I was happy to see that ShowingTime resumed their graph of showings going back to 2020. It is encouraging to see that 2023 showings were almost tied with the last three years in January and just a little below in February. It should come as no surprise that showings dropped down this week because of the snow… will be interesting to see if showings catch up again this coming week.
Year-to-date new and pending listings continue to hang below the last two years, but coming soon listings were pretty close to last year, will be interesting to see if they strengthen in the coming weeks.
It seems like we have been talking about the lack of inventory forever… and that problem still persists. The article below from our blog at Keeping Current Matters talks about two root causes that are keeping inventory low at this time.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
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.
Rate-Locked Homeowners
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 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. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.
What Does This Mean for You?
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.
Bottom Line
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.
