Two common concerns holding back homeowners who are considering selling are the fear of being locked in by current high mortgage rates and the worry of not being able to find a suitable property due to low supply. Let's address each challenge and provide some useful advice on how to overcome these obstacles.

The Federal Housing Finance Agency (FHFA) reports that the average interest rate for homeowners with mortgages is currently below 4%, as depicted in the accompanying graph:

However, in today's market, the average 30-year fixed mortgage rate offered to buyers is closer to 7%. Consequently, many homeowners are choosing to stay in their current homes rather than moving to a new property with a higher borrowing cost. This phenomenon is commonly referred to as the mortgage rate lock-in effect.

The Advice: Waiting May Not Pay Off

Although experts anticipate a gradual decline in mortgage rates this year due to a cooling inflation, it is not advisable to wait to sell based solely on this projection. Mortgage rates are notoriously difficult to predict accurately. Moreover, current market conditions indicate a rise in home prices. By choosing to move now, you can avoid the impact of increasing home prices when purchasing your next property. Additionally, if the experts' predictions hold true and rates do decrease, you always have the option to refinance at a later time.

Due to homeowners' reluctance to accept higher interest rates, there is a decrease in the number of homes being listed for sale. Consequently, this limited supply of homes for sale is contributing to the low inventory levels. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), clarifies:

“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.”

While it is true that the limited housing supply can make your house more appealing to eager buyers, it can also create a sense of hesitation when it comes to selling. The fear of struggling to find a suitable property to purchase is understandable.

The Advice: Broaden Your Search

If the primary factor holding you back from selling is the fear of not being able to find your next home, it is important to consider all available options. Broadening your search to include various housing types such as condos, townhouses, and newly built homes can provide you with a wider range of choices. Additionally, if you have the flexibility to work remotely or in a hybrid model, you can explore areas that you may not have considered before. By expanding your search radius and considering locations further from your workplace, you may discover more affordable options.

Bottom Line

Rather than dwelling on the challenges, it is beneficial to shift your focus towards what you can control. One way to do this is by reaching out to a local real estate agent. By working with a professional who has the necessary experience and expertise, you can effectively navigate the current market conditions and find the perfect home for your needs. Their knowledge and guidance will be invaluable in helping you overcome any obstacles and make informed decisions throughout the process.