Many homeowners think about selling and have two key things holding them back. Feeling trapped by today’s high mortgage rates and worrying that they won’t be able to find something to buy while the supply is so low. Let’s dive into each challenge and give you some helpful tips on how to overcome these obstacles.
Challenge #1: Resistance to taking 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%.
But today, the typical 30-year fixed mortgage rate offered to buyers is closer to 7%. As a result, many homeowners are choosing to stay rather than move to another home with a higher borrowing cost. This is a situation known as the mortgage rate lock-in effect.
The tip: Waiting may not pay off-while experts project that mortgage rates will gradually fall this year as inflation cools, that doesn’t necessarily mean you should wait to sell. Mortgage rates are notoriously difficult to predict. And, right now, home prices are on the rise again. If you move now, you’ll at least outpace rising home prices when you buy your next home. And, if the experts are right and rates fall, you can always refinance later if that happens.
Challenge #2: 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 on the market. That’s going to keep inventory low. As Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) explains, “Inventory will remain constrained in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up to a larger or smaller home after securing historically low mortgage rates in recent years.” Even though you know this limited supply of homes will help your home stand out to eager buyers, you may also make them hesitant to sell because they don’t want to struggle to find something else to buy.
The tip: Broaden your search
If the fear of not being able to find your next home is the main thing holding you back, remember to consider all your options. Look at all types of homes, including condos, townhouses and even newly built homes, can help you make more choices. Also, if you can work completely remotely or hybrid, you may be able to consider areas you hadn’t previously looked at. If you can look farther away from where you work, you may have more affordable options.
In conclusion, instead of focusing on the challenges, focus on what you can control. Contact a local agent so that you are working with a professional who has the experience to navigate these waters and find the perfect home for you.