Jul 21, 2023 - Real Estate

"Golden handcuffs" pinch metro Atlanta's housing market

Data: Redfin; Chart: Alice Feng/Axios Visuals

Nearly 60% of homeowners with mortgages in Georgia have a rate below 4%, per Redfin data shared with Axios.

  • That's locking homeowners in place and leaving buyers with few homes to choose from.

Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon.

  • They might have a great rate now, but likely can't move without spending a lot more cash, explains Redfin chief economist Daryl Fairweather.

By the numbers: In metro Atlanta, buying a median-priced home in 2021, which came in at $325,000, at a 3% rate, would correspond to monthly mortgage payments of $1,565, per Redfin.

  • At 6.4% — the U.S. average rate in May — a home at the same price would have an estimated monthly payment of $2,105 per month.

Roughly 90% of mortgage holders in Georgia have a rate lower than 6%, according to Redfin's data.

What they're saying: Metro Atlanta's inventory of homes for sale was already tight before the Fed's interest rate hikes.

  • With people staying put and fewer homes going on the market, home prices — which tend to drop or stabilize when loans become more expensive — are actually increasing, Mike Carnathan of the Atlanta Regional Commission told Axios.
  • If the inventory of for-sale homes doesn't keep up, people rent or look to buy elsewhere, he says.

Zoom out: It's not just a local issue. Nine in 10 U.S. homeowners secured mortgage rates below 6% as of late 2022, per the new Redfin report. Meanwhile, mortgage rates have swung between 6 and 7% nationally in recent months.


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