More sellers who were previously locked into their mortgages are choosing to list their homes, signaling that the lock-in effect might be easing up on potential sellers, according to JPMorgan Asset Management. The mortgage lock-in effect has caused homeowners to hold onto their properties due to the low rates at which they financed their homes in the past, resulting in a decrease in housing activity with a significant drop in home sales last year.
However, there has been a recent uptick in home sales, indicating that the lock-in effect might be lessening its grip on potential sellers. Data from the National Association of Realtors shows a 9.5% increase in existing home sales in February, along with an increase in existing home inventory. Real estate economists suggest that high mortgage rates are expected to persist, leading homeowners to become more willing to enter the housing market.
With around 1.6 million homes currently under construction and completions surging in February, there is hope for an increase in housing supply. JPMorgan strategist Stephanie Aliaga believes that the housing sector is showing signs of improvement after being negatively impacted by rate hikes. Despite these positive developments, it will likely take time for the housing market to fully recover as imbalances between supply and demand have put pressure on homebuyers, leading to higher prices. Real estate economists predict that it could take years for supply to catch up with demand before the mortgage lock-in effect finally fades away completely unless interest rates drop suddenly.
In summary, while there are positive signs emerging from the real estate market regarding increased activity and rising inventories of available properties for sale, it is unlikely that we will see a full recovery anytime soon due to ongoing imbalances between supply and demand and concerns over high mortgage rates remaining persistent in the future.
