Can lower rates bring new listings to the market?
More stress in the financial sector last week is forcing the bond yields lower, which means mortgage rates should be dropping too. There is also talk about the Fed having to pivot and begin cutting rates this year.
That would help both Boston condo buyers and sellers
But would it fix the Boston condo for sale inventory shortage?
Boston condo affordability
Everyone has said that the high rates have killed affordability, and that’s why the national real estate market is in trouble. You see the estimates every week that buying the same Boston condo today is 30% to 40% more costly than it was a year ago, and that home prices need to plunge to compensate.
Boston Condo and the Golden Handcuffs
We also hear that the inventory is so scarce because 90% of homeowners have a mortgage rate under 4%. It’s been called the Golden Handcuffs because nobody would trade a 2.5% rate for a 7% rate.
The Feds Response
Jay Powell said he is going to cause a real estate reset, but admitted that he doesn’t know what to expect.
Whether he causes a recession or a banking meltdown, rates might come down some this week. Will that save us?
Specifically, if rates came back to 3%, would it save real estate?
No, because rates aren’t our biggest problem here. Our biggest problem is the lack of inventory, because 1) it’s too difficult to find a better home locally, and 2) nobody wants to leave the area. As a result, everyone has bought their forever home here (whether they knew it or not), regardless of rates.
Rates and prices will bounce around, but it will always be tough to move because of the lack of inventory – and here it gets worse every day.
Boston condo inventory
The low inventory is feeding on itself now, because the first-timers and out-of-towners who don’t own a home here yet are so frustrated that they will outbid locals who already own a home here.
It’s why lower rates won’t change our inventory. Heck, even higher prices didn’t cause more people to sell, and now, just about everybody won’t sell at ANY price. Yikes!
At what price are you a seller?
See what I mean!