<article class="post-642384 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-642384"><span class="entry-date">February 21, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">The Two Big Issues the Housing Market’s Facing Right Now</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=The+Two+Big+Issues+the+Housing+Market%E2%80%99s+Facing+Right+Now&url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fthe-two-big-issues-the-housing-markets-facing-right-now%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="The Two Big Issues the Housing Market’s Facing Right Now Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/the-two-big-issues-facing-the-housing-market-right-now-KCM.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>The biggest challenge the housing market’s facing is how few homes there are for sale. Mark Fleming, Chief Economist at <em>First American, </em><a href="https://blog.firstam.com/economics/why-housing-market-potential-increased-for-the-second-straight-month">explains</a> the root causes of today’s low supply:<!–more–></p>
<blockquote><p><em>“Two dynamics are keeping existing-home inventory historically low – <strong>rate-locked existing homeowners</strong> <strong>and</strong> <strong>the fear of not finding something to buy</strong>.”</em></p></blockquote>
<p>Let’s break down these two big issues in today’s housing market.</p>
<h4><strong>Rate-Locked Homeowners</strong></h4>
<p>According to the <em>Federal Housing Finance Agency </em>(FHFA), the <a href="https://www.fhfa.gov/DataTools/Downloads/Pages/National-Mortgage-Database-Aggregate-Data.aspx">average interest rate</a> for current homeowners with mortgages is less than 4% (<em>see graph below</em>):</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2023/02/16150229/average-mortgage-rate-is-less-than-4-percent-MEM.png"><img alt="The Two Big Issues the Housing Market’s Facing Right Now | Simplifying The Market" class="aligncenter wp-image-48836" decoding="async" fetchpriority="high" height="488" src="https://files.simplifyingthemarket.com/wp-content/uploads/2023/02/16150229/average-mortgage-rate-is-less-than-4-percent-MEM.png" width="650"/></a></p>
<p>But today, the typical mortgage rate offered to buyers is <a href="https://www.freddiemac.com/pmms">over 6%</a>. 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 <em>rate locked</em>.</p>
<p>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 <a href="https://www.simplifyingthemarket.com/2023/01/17/think-twice-before-waiting-for-3-mortgage-rates/?a=712984-fa409495d5d70154d03a25e81e9540e2">mortgage rates</a> will gradually fall this year, and that could mean more people will be willing to move as that happens.</p>
<h4><strong>The Fear of Not Finding Something To Buy</strong></h4>
<p>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 <a href="https://www.simplifyingthemarket.com/2023/01/30/where-will-you-go-if-you-sell-you-have-options/?a=712984-fa409495d5d70154d03a25e81e9540e2">options</a>. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate <a href="https://www.simplifyingthemarket.com/2023/2/15/should-you-consider-buying-a-newly-built-home/?a=712984-fa409495d5d70154d03a25e81e9540e2">buydowns</a>.</p>
<h4><strong>What Does This Mean for You?</strong></h4>
<p>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 <a href="https://www.simplifyingthemarket.com/2023/2/17/the-spring-housing-market-could-be-a-sweet-spot-for-sellers-infographic?a=712984-fa409495d5d70154d03a25e81e9540e2">sweet spot</a> that can work to your advantage.</p>
<p>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 <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q4-2022-u-s-home-equity-and-underwater-report/"><em>ATTOM</em></a>:</p>
<blockquote><p><em>“. . . <strong>48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter</strong>, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”</em></p></blockquote>
<p>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.</p>
<h3>Bottom Line</h3>
<p>
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.</p>
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