Why we may have a Boston condo for sale shortage for years to come

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Why we may have a Boston condo for sale shortage for years to come

As mortgage rates rose rapidly last year, the golden handcuffs of low mortgage rates, otherwise known as the rate lock-in effect, was frequently cited as a primary culprit for the ongoing housing supply shortage. And, rightfully so, as according to third-quarter 2022 Federal Housing Finance Agency data, 84 percent of all outstanding mortgages have a mortgage rate at, or below, 5 percent and 63 percent have a rate at, or below, 4 percent.


“With higher mortgage rates deterring many rate locked-in homeowners from selling, free-and-clear homeowners may hold the key to unlocking some much-needed supply for today’s housing market.”


Now that mortgage rates are settling near 6 percent, there is a financial disincentive for homeowners who are locked into low mortgage rates to sell their homes and buy a new home at a higher rate. The golden handcuffs of low mortgage rates restrict housing market turnover and limit more supply from reaching the market. As a result, the average length of time that a homeowner stays in their home has reached an all-time high of over 10.5 years.

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