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Homeownership is proving to be a stabilizing force in the housing market, and the numbers bear this out. Here’s a look at how incredibly low mortgage rates are impacting homeowner decisions (information initially found at www.resiclubanalytics.com).

• A Shocking Number Are Mortgage-Free: Believe it or not, a massive 39% of U.S. homeowners have already paid off their mortgages entirely. This substantial group is completely immune to the pressures of rising interest rates.
• Fixed Rates Rule the Roost: Further solidifying stability, a whopping 96% of homeowners with mortgages opted for fixed-rate loans. This predictability in monthly payments shields them from the ups and downs of the market.
• Rates That Are Hard to Beat: The picture gets even clearer when we delve into interest rates. A staggering 76% of these homeowners enjoy rates below 5%, with a significant portion (35%) between a very attractive 3.00% and 3.99%. An impressive 21.9% even locked in rates lower than 3.0%!

Analysts at Morgan Stanley aptly dubbed these homeowners the market’s “strong hands.” With such advantageous mortgages, they have little reason to sell, even with rising rates and economic uncertainty. This dynamic has a significant impact on housing inventory.

Low Inventory and What it Means for You

The abundance of low-rate mortgages is a key reason for the persistently low availability of houses. Many homeowners are simply unwilling to give up their incredibly beneficial rates by selling.

REALTOR® Tips for Buyers and Sellers

• Buyers: Be prepared to act swiftly when you find a suitable property. With limited inventory, competition is fierce.
• Sellers: Consider leasing your property if your mortgage rate falls below 4%. This allows you to generate rental income while holding onto your low rate and capitalizing on high rental demand, as suggested by real estate expert Juan C Pesqueira.

Conclusion

The high number of mortgage-free homeowners and the widespread presence of low, fixed-rate mortgages contribute to a surprisingly stable U.S. housing market. Understanding these factors is crucial for making informed real estate decisions as the market encounters economic fluctuations.

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