How High Mortgage Rates Impact Homebuyers and Sellers: Many people who wanted to buy or sell a home in 2023 have decided not to because of the high mortgage rates.
But there are signs that both sides might be more open to a high-rate mortgage if certain other things came together.
Five hundred and forty-four (544 of those surveyed) residents said they would move if they could find a cheaper place to live, even if it meant paying more on their debt. Half of those people said they would sell if they found their dream house.
“The American dream of homeownership is still alive and well,” said Matt Vernon, who is in charge of consumer loans at Bank of America. “They still think it’s an important part of making money.” They’re still sure that it’s a good way to measure success.
In late September, Bank of America surveyed 500 landlords and 500 renters.
How High Mortgage Rates Impact Homebuyers and Sellers: Why a lot of homes are “staying put”
The average interest rate for some 30-year fixed-rate mortgages went down to 7.37% last week from 7.41% the week before. This is the fourth week in a row that the rate has gone down. Since mortgage rates have gone down, more people are applying for loans.
Bank of America study shows that about 80% of all mortgages in the U.S. have interest rates below 5%. Even though mortgage rates have recently gone down, renters may not be motivated to move.
CEO of Redfin, Daryl Fairweather, said, “The story for 2023 has been one of homeowners staying put.”
Things that have been making them immobile have recently started to get better, but it’s still too early to tell if that will last.
A study by Redfin on November 30 found that the average monthly mortgage payment is now less than $150 less than it was at its highest point. This is the lowest level in three months. As mortgage rates fall from their high point, monthly payments go down.
Redfin says that the weekly average 30-year mortgage rate dropped from a high of 7.79% in October to 7.29% in late November.
The typical sell price of a home has gone up 4%, but rates are going down to balance that out. The number of new entries is up 6% from last year. This is the biggest year-over-year rise since 2021, according to Redfin.
More buyers who are ready to take a chance
Bank of America found that 62% of people who want to buy a home are waiting for costs and/or rates to go down before they do so. This is down from 85% who said the same thing six months ago, suggesting that more people may be ready to take a chance to reach their goal.
Skylar Olsen, head economist at Zillow, says that people will often move after big events in their lives.
As things stand, Olsen said, “the problem is that right now, money stops people from making that big profound change.”
She said that while they wait for home prices to go down, they might choose to deal with a long drive to a new job.
Olsen said that might start to change in 2024, but it will probably happen very slowly.
Zillow predicted that mortgage rates would rise very slowly. This could mean that the number of new ads will also rise very slowly, she said.
Olsen said that people who want to buy a house but are looking for prices to drop a lot will be let down.
She said that home prices will probably rise less quickly over the next five years, rather than falling sharply, unless big things change in the way things are now.