Join the Party!

It seems to be a little early to be speaking about spring, since it is the middle of January. However, in the real estate sector, we never know when the spring market will emerge and how strong it will be. Most of the forecasts point towards a better year for the real estate market, but only marginally better than 2023. But the real determinate of how strong and early the spring will be will not be prognosticators. It will be the sellers.

Last year was all about the lock-in effect. The lock-in effect describes sellers sitting on low interest rate mortgage loans and not selling their homes because their next home would be financed at a much higher rate. Mortgage rates have come down from their highs of last fall, but most believe that rates have not moved enough to motivate this latent demand of sellers. Thus, most are predicting marginal gains in the market as sellers slowly come to the table.

On the other hand, life goes on. Baby boomers, many of whom own their homes without a mortgage, are getting older and many will need to make their final move. As a matter of fact, recent numbers show that close to 40 percent of homeowners do not have a mortgage. These owners are not restricted by interest rates because they are not likely to finance their next home if they are to purchase again. Thus, the lock-in effect may not be as strong as it may seem. The bottom line? The more sellers who come to the party, the earlier and stronger the spring market may become.