Don't Let These Two Things Hold You Back, Sellers!
Many homeowners considering selling have two major roadblocks. That is feeling trapped by today's increased mortgage rates and concerned about not being able to locate something to buy because supply is so limited. Let's take a look at each difficulty and offer some tips on how to overcome them.
Challenge #1: The Reluctance to Take on a Higher Mortgage Rate
According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):
However, the usual 30-year fixed mortgage rate available to purchasers now is closer to 7%. As a result, many homeowners are choosing to stay in their current home rather than move to a home with a higher borrowing cost. This is referred to as the mortgage rate lock-in effect.
The Advice: Waiting May Not Pay Off
While analysts predict that mortgage rates will progressively fall this year as inflation cools, this does not always indicate that you should wait to sell. Mortgage rates are notoriously difficult to anticipate. And, just now, home prices are rising again. If you move now, you will at least beat growing housing prices when you buy your new home. And, if experts are correct and interest rates fall, you can always refinance later.
Challenge #2: The Fear of Not Finding Something to Buy
When so many homeowners are reluctant to take on a higher rate, fewer homes are going to come onto the market. That’s going to keep inventory low. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“Inventory will remain tight in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years.”
The Advice: Broaden Your Search
If you're worried about not being able to find your future house, remember to evaluate all of your possibilities. Looking at all kinds of housing, including condos, townhouses, and even freshly built homes, might provide you with more options. Furthermore, if you can work entirely remotely or in a hybrid capacity, you may be able to examine topics you had not previously considered. If you can look further away from your workplace, you may find more cheap possibilities.
Instead of focusing on the difficulties, concentrate on what you can manage. Let's get in touch so you can work with someone who knows how to navigate these waters and discover the perfect property for you.