By Mel Dorman, June 2, 2022
Normally, as COVID-19 becomes a receding part of our lives, I would think that New Listings from existing homeowners would increase.
Instead, we may see continued low inventory. Why? Recent data from Redfin shows that 51% of homeowners with a mortgage have an interest rate below 4% and that could be a disincentive for homeowners to sell.
For many homeowners who have become accustomed to super low rates, the idea of selling a home with a mortgage rate under 4% and entering a competitive housing market with high prices, AND paying more on their next loan is simply not an attractive proposition. It’s for this reason the term “Lock-In Effect” has been coined.
Many economists and analysts believe the number of new listings could remain low for a few years while homeowners feel “locked-in” to their unusually low mortgage rates (I get it – I’m grown rather fond of my interest rate). This could mean that the low inventory that has been pushing up housing prices could continue to impact the housing market for years, if not decades to come.
Basically, if fewer homeowners put their homes up for sale, it could prevent inventory from recovering to more normal, pre-covid levels when the housing market was more balanced.
It’s for this reason the term “Lock-In Effect” has been coined. Many economists and analysts believe the number of new listings could remain low for a few years while homeowners feel “locked in” to their unusually low mortgage rates.
If it does materialize, it could have profound impacts on the housing market for years, if not decades to come.
It all comes down to inventory. If fewer homeowners put their homes up for sale, it could prevent inventory from recovering to more normal, pre-covid levels when the housing market was more balanced.
For now, we’ll be watching the Lock-In Effect. It will be interesting to see if the predictions of continued lower inventory come true.
Mel Dorman
Broker | OR & WA
She/They
Ten years ago, Melissa was living in a slum in Kolkata, India, helping over 200 women escape sex trafficking by providing alternative work at a social business.
It was there she discovered her passion for financial education as a means of empowering people to move out of poverty. After graduating from UCLA with a Masters, Melissa spent 5 years working as a Social Worker; assisting clients facing homelessness, in jail, or at a psychiatric facility.
As much as she loved the work, imagining saving for retirement on the meager salary of a social worker was becoming grim. That's when Melissa discovered "passive income." In no time, she fell in LOVE with real estate as a vehicle for wealth. Soon after, Melissa began locating off-market multi-family properties to purchase through creative financing strategies and win-win opportunities. Two years into investing, Melissa quit her day job as a Social Worker to become a full-time broker and investor. Initially, she was drawn to people in difficult circumstances, so she developed extensive experience assisting families facing foreclosure, short sales, and probate. Melissa is well versed in helping her clients overcome complex real estate challenges.
Currently, Melissa is teamed up with Super Broker, Yascha Noonberg at Living Room Realty. Together they assist clients to achieve their real estate dreams, including how to strategically buy and sell a personal residence to maximize profits. Far from the slums of Kolkata, her greatest passion now is empowering other working professionals to develop passive forms of income through buying multi-family properties in Portland.
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- T: 503-567-4697
- melissa@livingroomre.com
