The share of homeowners with mortgage rates below 6% is currently around 88.5%, according to Redfin.
That’s down from a record high of 92.8% in mid-2022.
Driving the decrease over the past year are two main factors, 1) many home buyers during the past year gave up waiting for a lower rate and purchased anyway and 2) anyone who purchased a home during the past year likely has a rate higher than 6%.
Most homeowners with rates under 6% are currently opting to stay put instead of selling and buying another home at a higher rate—a phenomenon called the “lock-in effect.”
But as the report notes, life happens, and people often cannot stay in one place forever.
Many are selling because a major life event like a divorce has given them no other choice, while others are putting their homes on the market because they want to live in a different house or city.
“I’m working with a lot of homeowners who are selling because of things like divorces, new jobs or deaths in the family,” says David Palmer, a Redfin Premier real estate agent in Seattle, in the report. “I’m also working with homeowners who are bursting at the seams and selling because they’ve outgrown their current home.”
Redfin notes that for some homeowners, the fact that home prices soared during the pandemic means they have enough equity to justify selling and taking on a higher rate—especially if they’re downsizing or moving somewhere more affordable.
Photo: Karsten Winegeart