"Golden handcuffs" lock up Austin housing supply
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Roughly 57% of homeowners with mortgages in Texas had a rate below 4% as of late last year, locking homeowners in place and leaving buyers with fewer homes to choose from, per Redfin data shared with Axios.
Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon, writes Axios' Brianna Crane.
- 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 the Austin metro area, buying the median-priced home in 2021 — $465,000 — at a 3% rate would have cost about $2,239 monthly, per Redfin.
- At 6.4% — the U.S. average rate in May — a home at the same price would cost an estimated $3,011 per month.
Zoom in: June listings in the Austin area are down nearly 33% compared to last year, according to Zillow.
- Meanwhile, pending sales in the region fell 8.3% from May to June and are down 9% year-over-year, per Zillow.
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.
Yes, but: Buyers are also exploring adjustable-rate mortgages or buydowns in hopes of a lower monthly payment, Fairweather says.
Reality check: Lower rates could loosen up some supply but not enough to meet demand, Fairweather says.
- New construction isn't keeping up, either. Fairweather predicts it'll take the U.S. a decade to repair its housing shortage.