When moving means a higher mortgage rate, why sell?
When moving means a higher mortgage rate, why sell?
Just about everyone who owns a home in this country is hanging on to it. The number of existing homes, as opposed to newly built, that sold in May was 20% lower than a year earlier. That’s according to data released Thursday by the National Association of Realtors.
Even if people want to move, many who bought or refinanced a couple of years back are loath to give up a 3% interest rate on their mortgage, especially if it means buying a new house at a rate well above 6%.
In Kate Sam’s household, sleepovers are not really doable.
“You can hear everything from anywhere,” Sam said.
She has two kids, ages 4 and 8. And she’d like to sell their small house in Baltimore to buy a bigger place so they could host sleepovers.
But Sam and her husband refinanced their mortgage in 2021 at a rate of 3%. And now, “it’s just unimaginable to give up the current cost,” she said.
Lots of people are choosing to stay put even if they’d rather sell. Lawrence Yun, chief economist with the National Association of Realtors, said he expects there to be fewer divorces (!) this year.
“The couple may not like each other, but they love their 3% mortgage rate, so they don’t want to give that up, Yun said.
Others may avoid taking new jobs if it means relocating, he added.
But certain life changes might cause people to make a move — even at those higher rates. Like having a third child when you live in a two-bedroom condo.
“At some point, the financial benefit of staying in the same space loses its luster, so to speak,” said Jonathan Miller, who leads Miller Samuel, a real estate appraisal and consulting firm in New York.
Others want less space and a different layout, said Mark Goldman, a loan officer with C2 Financial Corp., a mortgage brokerage.
“A lot of people, when they age, they want a bedroom on the first floor. They don’t want to be dealing with stairs,” Goldman said.
And then, there are sales in which the homeowner won’t need to buy a new place.
“What I’ve been suggesting to my real estate agents is — watch the obituaries. You know, a lot of times when somebody passes away, the kids don’t want the house, they want the cash,” Goldman said.
And if rates do eventually go down, say, back into the 5% range, Miller expects all those people who’ve been holding out to put up a For Sale sign so they can finally get divorced … or host that sleepover.
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