Axios April 18, 2022 “Why homeowners aren’t selling” by Felix Salmon
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Summary by 2244
Data from WOLFSTREET.com shows that existing home sales rates are down same month year-over-year.
At least four factors will dictate the near future of the sales of existing homes.
First, so many existing homeowners have mortgages with historically low rates. The breakout presented shows 285K homeowners having rates below 2%, 4.7M having rates 2-2.5%, 13.1M 2.5-3%, 11.3M 3-3.5%, 9.5M 3.5-4%, 5.9M 4-4.5%, 3.6M 4.5-5%, 1.5M 5-5.5%, 1.1M 5.5-6%, 1M 6-6.5% and 1.6M 6.5% or higher. Based on these data, 90% of existing homeowners have mortgages at a rate of 5% or lower-5% being the current going rate.
Second, these fortunate homeowners, including lower-income homeowners, comment that their current home and mortgage situation is affordable given their current income and costs.
Third, having an affordable mortgage will keep most of these homeowners from relocating or moving-up as they would probably incur higher finance rates. That can keep most of the existing homes off the market and accordingly lessen the supply of existing homes. In such a market, where rates are still historically low, demand will still likely outstrip supply and cause prices to rise across the market.
Lastly, rising rates at some point could start to erode demand and eventually lower the asking price for existing and new homes.