Homebuyers have suffered some severe whiplash in recent months. After all, when mortgage rates hit 8% in late October, it was reasonable to think the housing market would stay on ice throughout the winter. The move cemented a narrative of negativity about poor affordability and homeowners with low-rate loans being unwilling to sell. Seven weeks later, mortgage rates are flirting with 7% and there are signs that inventories and sales are picking up.

It’s another example of how the US housing market continues to defy expectations with prices staying elevated in the face of an aggressive cycle of interest-rate increases from the Federal Reserve. Next year may well surprise again, though January should provide a window of opportunity for would-be homebuyers who have been shut out so far.

The argument for urgency is based on how the housing market is evolving in ways counter to some of the negative commentary out there. At a time when there’s a belief that having a low mortgage rate will cause homeowners never to sell, new listings of homes are up 6% year-over-year, according to real estate brokerage Redfin Corp.

Homeowners are more motivated to sell now than they were a year ago. Sure, tens of millions of them are locked into mortgage rates below 4%, if they have a home loan at all. But “the 5 Ds” that prompt people to move — diapers, diplomas, diamonds, divorce and death — happen regardless of where mortgage rates are. Many homeowners who have put off selling for 18 months are now looking to transact, pointing to a rise in housing inventory in 2024, regardless of whether mortgage rates are at 6% or 8%.

QOSHE - Frustrated Homebuyers Are About to Catch a Break - Conor Sen
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Frustrated Homebuyers Are About to Catch a Break

6 13
07.12.2023

Homebuyers have suffered some severe whiplash in recent months. After all, when mortgage rates hit 8% in late October, it was reasonable to think the housing market would stay on ice throughout the winter. The move cemented a narrative of negativity about poor affordability and homeowners with low-rate loans being unwilling to sell. Seven weeks later, mortgage rates are flirting with 7% and........

© Bloomberg


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