Are More Homeowners Selling as Mortgage Rates Come Down?

Are More Homeowners Selling as Mortgage Rates Come Down?




If you’re looking to buy a home in Metro Detroit, the recent downward trend in mortgage rates is good news because it helps with affordability. But there’s another way this benefits you – it may inspire more homeowners to put their houses up for sale.

The Mortgage Rate Lock-In Effect

Over the past year, one factor that’s really limited the options for your move is how few homes were on the market. That’s because many homeowners chose to delay their plans to sell once mortgage rates went up. An article from Freddie Mac explains:

The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked.”

These homeowners decided to stay put and keep their current lower mortgage rate, rather than move and take on a higher one on their next home.

Early Signs Show Those Homeowners Are Ready To Move Again

According to the latest data from Realtor.com, there were more homeowners putting their houses up for sale, known in the industry as new listings, in December 2023 compared to December 2022 (see graph below):

 

Here's why this is so significant. Typically, activity in the housing market cools down in the later months of the year as some sellers choose to delay their moves until January rolls around.

This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to lower rates.

What This Means for You

While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS):

A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . .”

And that means you may see more homes come onto the market to give you more fresh options to choose from.

Bottom Line

As mortgage rates come down, more sellers may re-enter the market – that gives you an opportunity to find the home you’re looking for. Let’s connect so you’ve got a local expert on your side who’ll help you stay on top of the latest listings in our area. Message us for more information 248.755.3545

20 Properties
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4
Beds
3F11/2
Baths
2,764
Sq.Ft.
1985
Year Built
2
Days on Site
81024009287
MLS
7,600
Sq.Ft.
4
Days on Site
20240011369
MLS
2
Beds
1
Baths
720
Sq.Ft.
1943
Year Built
4
Days on Site
20240011313
MLS
2
Beds
1
Baths
936
Sq.Ft.
1941
Year Built
4
Days on Site
20240011318
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Coming Soon on 02/28
7532 Cardwell St Westland,  MI 48185
$205,000
Neighborhood: Dearnan Park Resub
3
Beds
2
Baths
913
Sq.Ft.
1965
Year Built
7
Days on Site
20240010462
MLS
39.48
Acres
7
Days on Site
20230058691
MLS
$30,000
Neighborhood: Elm Park Sub
0.12
Acres
7
Days on Site
20230104595
MLS
$750
Neighborhood: Arthur J Robertsons Add
3,234
Sq.Ft.
7
Days on Site
20230101604
MLS
$350,000
Neighborhood: Wakefield Woods Sub
4
Beds
2F11/2
Baths
2,406
Sq.Ft.
2003
Year Built
7
Days on Site
20240009419
MLS
3
Beds
1F11/2
Baths
1,092
Sq.Ft.
1955
Year Built
8
Days on Site
81024008374
MLS
2
Beds
1F11/2
Baths
19
Sq.Ft.
14
Days on Site
81024007407
MLS
$1,375 / month
Neighborhood: Koppins Halfway Homes
3
Beds
1
Baths
1,080
Sq.Ft.
1944
Year Built
16
Days on Site
20240008586
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