Despite high interest rates, home sellers are coming off the sidelines
Despite high interest rates, home sellers are coming off the sidelines
One persistent complaint about the housing market is that higher interest rates have kept a lot of would-be sellers from putting their homes — with their 3% mortgages — up for sale. Because they’re gonna pay a lot more than 3% on a new mortgage.
Well, according to the latest monthly real estate report from Zillow, those sellers seem to be getting over their hesitation.
The higher mortgage rates haven’t gone anywhere. But Guy Cecala from Inside Mortgage Finance said impatient sellers who’ve wanted to move for several years seem to be pulling the trigger now.
“If you want to downsize … you can’t wait forever. Would-be sellers who sat on the fence have said, ‘OK, it’s time to move,'” he said.
There is also good news for the yearslong housing shortage because fewer sellers are looking to buy another house. That’s partly because their median age, 63, is the highest ever. They might be moving in with family or into assisted living. Or their other home.
“People have second homes, a smaller retirement home that’s in a nice vacation area, and they’re just going to move there full time,” Cecala said.
The homes that are going on the market have gained in value, thanks to the housing shortage. Timothy Savage, a professor at New York University’s Schack Institute of Real Estate, said that means even if sellers need to buy another home, it’s worth selling anyway.
“Sellers are motivated, even in the face of high mortgage rates, to lock in the equity gains that they’ve earned,” he said.
Zillow also reported a record number of price cuts in last month’s listings. That might seem odd, given the housing shortage. But Savage said that’s actually just another sign of motivation.
“Sellers are eager to sell and take small haircuts, essentially to lock in the equity gains,” he said.
The other surprising piece of this: It’s happening in the dead of winter.
“Winter months are always more sluggish,” said economist Jessica Lautz with the National Association of Realtors. “People don’t want to put on their snow boots to look at homes.”
Which could mean even more movement in the housing market is on tap for the busy season in the spring.
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