Part 5/10:
To add more context, 2024 already marked a historic low for home sales in recent decades, with existing home sales reaching their lowest levels since 1995. This downtrend highlights a troubling discrepancy between economic indicators and homeowner experiences.
The Mortgage Lock-In Effect
One significant factor contributing to these market conditions is the mortgage lock-in effect. Many homeowners, who refinanced at record-low rates during the pandemic, are now hesitant to sell. Facing current mortgage rates of around 7%, these individuals face cost-prohibitive conditions if they purchase new homes, thus restricting the flow of homes onto the market and creating an environment with low demand.