According to data from FHFA as analyzed by Redfin here is a breakdown of the percentage of homeowners with a mortgage under certain rates. These are national numbers–
· 91.8% of U.S. homeowners with a mortgage have an interest rate below 6^
· 82.4% have a sub-five percent rate mortgage.
· 62% have a sub-four percent rate.
· 23.5% have a sub-three percent rate.
Here in Colorado 96% of homeowners with a mortgage have a rate < 6% and 29% of them have a rate below 3%.
Redfin completed a survey in early June with the help of Qualtrics as they asked U.S. homeowners who are considering listing their homes for sale in the next year what rate do they need to see to give them more urgency to sell their home. This is urgency to sell possibly not a commitment to list their home. Here are the results—
· 27% said they would feel more urgency if rates dropped below 5%.
· 49% would feel more urgency if rates dropped below 4%.
· 78% would feel more urgency if rates dropped below 3%.
Honestly, I am 95% sure we will never see rates below 4% again in my lifetime unless another Black Swan event like Covid happens. Thus, half of our available home inventory of homes with mortgages may never be listed for sale until homeowners die, divorce, move out of state or relocate locally.
And remember from an April survey that 71% of people who want to buy a home won’t buy until rates are below 5.50%. Thus, demand looks like it will increase before supply of homes for sale dramatically increases. And this will cause home prices to increase and possibly dramatically for homes under $600k or $700k. This means buyers waiting to buy a home until rates drop will probably pay dramatically more for their home as demand will outstrip supply.