Many homeowners thinking aboutsellinghave two key things holding them back. Thats feeling locked in by todays higher mortgage rates and worrying they wont be able to find something to buy while supply is so low. Lets dive into each challenge and give you some helpful advice on how to overcome these obstacles.
Challenge #1: The Reluctance to Take on a Higher Mortgage Rate
According to theFederal Housing Finance Agency(FHFA), theaverage interest ratefor current homeowners with mortgages is less than 4% (see graph below):
But today, the typical 30-year fixedmortgage rateoffered to buyers is closer to7%. 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 the mortgage rate lock-in effect.
The Advice: Waiting May Not Pay Off
While experts projectmortgage rateswill gradually fall this year asinflationcools, that doesnt necessarily mean you should wait to sell. Mortgage rates are notoriously hard to predict. And, right nowhome pricesare back on the rise. If you move now, youll at least beat rising home prices when you buy your next home. And, if experts are right and rates fall, you can always refinance later if that happens.
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. Thats going to keepinventorylow. As Lawrence Yun, Chief Economist at theNational 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.
Even though you know thislimited housing supplyhelps your house stand out to eager buyers, it may also make you feel hesitantto sellbecause you dont want to struggle to find something to purchase.
The Advice: Broaden Your Search
If fear you wont be able to find your next home is the primary thing holding you back, remember to consider all your options. Looking at all housing types including condos, townhouses, and evennewly built homescan help give you more to choose from. Plus, if youre able to work fullyremoteor hybrid, you may be able to consider areas you hadnt previously searched. If you can look further from your place of work, you may have more affordable options.
Bottom Line
Instead of focusing on the challenges, focus on what you can control. Connect with a Seven Gables Advisor so youre working with a professional who has the experience to navigate these waters and find the perfect home for you.
