BAM Key Details:

  • A new survey from® and HarrisX shows 82% of seller-buyers are feeling the lock-in effect, and more than half (56%) plan to wait for mortgage rates to come down, while 25% have a personal need to sell soon. 
  • Baby Boomers are the least affected by higher rates as they tend to have a substantial amount of equity in their current homes, giving them a powerful edge in today’s market.  

We’ve known for some time that seller-buyers in the U.S. are feeling the lock-in effect of their lower mortgage rates. 

And now, there’s a survey to prove it.® published the results of a new survey conducted with HarrisX that shows 82% of those looking to buy and sell a home feel “locked in” to their low rates. 

More than half of them (56%) plan to wait until mortgage rates come (further) down, while 25% need to sell their home soon for personal reasons. 

This may be the best time of the year to sell your home. But today’s mortgage rates are considerably higher than the current rates most homeowners have. And for those who don’t need to sell—or don’t want to badly enough—that’s enough reason to stay put. 

Here’s what you need to know. 

Sellers are also buyers

According to the survey, 86% of those intent on selling their homes in the next 12 months also plan to buy a new home. And since most of those seller-buyers will be signing up for a new mortgage—with a substantially higher rate—their new home purchase will likely put additional strain on their budgets. 

For those with enough equity to buy down the mortgage rate and reduce their monthly payment, this will be less of an issue (to say nothing of those who can make an all-cash purchase). But for many potential seller-buyers, it’s forcing them to think twice about selling in the current market. 

One positive aspect that came out of the pandemic was historically low mortgage rates—and many people took advantage of this opportunity to buy their first home, upgrade to a more expensive home or refinance the home they were in. Unfortunately, this comes with a bit of a catch-22, as homeowners who locked in a 30-year fixed rate in the 2-3% range don’t necessarily want to give that up in exchange for a rate in the 6-7% range.

Danielle Hale® Chief Economist

Silver linings for homeowners (especially Boomers)

A recent episode of the Knowledge Brokers Podcast addressed two different buyer mindsets and two different demographics competing with each other: Boomers and Millennials

Boomers take up the largest share of homebuyers in today’s market. And this generation is more likely to sell after they’ve purchased their next home. 

Boomers are the runaway leader in who’s actually listing their homes this year…So, not concentrating your listing marketing materials on the Boomer pool because you think they’re phasing out is a huge mistake. And I will tell you explicitly, Boomers are gonna be in the game for the next 15 years.

Byron Lazine

(Boomers are) least impacted by the rates, they’ve got a ton of equity in their current homes. They have…the desire and the ability to live the lifestyle that they want. And so, it makes them an insanely powerful demographic.

Lisa Chinatti

My parents fall into that generation and they took the big single-family home–3,000+ square feet–they bought a property on the water down in Maryland and they maintain a smaller townhome up here…For them, it was ‘I’m sick of the maintenance’ …You know who they competed with for the townhome? A bunch of Millennials. And you know who they competed with for the condo on the water down in Maryland? A bunch of Millennials.

Tom Toole

Millennials are also likely to have a substantial amount of equity in their current homes. In fact, according to the survey, 85% of potential sellers across generations are happy with the equity cushion they’ve built, with 74% estimating they have over $100K and 20% estimating over $300K in equity. 

Sellers have high expectations

Even in this shifting market, with mortgage rates bouncing from the low to high 6s, sellers across the U.S. have high expectations from the sale of their home—higher, in many cases, than potential sellers surveyed in August 2022. 

About one-third (33%) of potential sellers today say they think they can make a profit by selling their home in the current market: 

  • 43% fully expect to get their asking price—up from 27% in 2022
  • 37% anticipate receiving an offer within a week of listing—up from 33% in 2022
  • 35% expect buyers to be willing to waive contingencies like appraisals and home inspections to reach a deal—up from 30% in 2022
  • 34% are expecting an all-cash offer—up from 22% in 2022
  • 31% expect to sell for an amount over their asking price—compared to 30% in 2022
  • 27% expect a bidding war for their home—compared to 32% in 2022

Given the changing housing market, it’s important for buyers and sellers alike to have realistic expectations heading into a home sale. By understanding the local market, sellers can make sure that they’re pricing their home well to help ensure a quick sale and avoid a home that lingers on the market.

Hannah Jones® Economic data analyst

Top takeaways for real estate agents

For potential sellers feeling the lock-in effect, help them see the bigger picture with a clear view of their options. Even if they decide not to sell right now, they’ll appreciate the time you’ve taken to help them make an informed decision. 

For buyers daunted by today’s mortgage rates but motivated to buy, help them explore resources at their disposal to reduce their upfront costs and possibly lower their rates. You can’t guarantee they’ll be able to refinance at a lower rate in the next 12 months, but you can shed some light on what they can do now to make a home purchase as affordable as possible. 

Always be transparent and truthful. Be the agent that stands out for going above and beyond to help your clients see and make the best decisions for them.