Louisiana homeowners locked up by "golden handcuffs"
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Roughly 54% of homeowners with mortgages in Louisiana 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: Just 11.6% of Louisiana homeowners have a mortgage rate above 6%.
- In the New Orleans-metro area, buying the median-priced home in 2021 — $274,250 — at a 3% rate would have cost about $1,321 monthly, per Redfin.
- At 6.4% — the U.S. average rate in May — a home at the same price would cost an estimated $1,776 per month.
Yes, but: June listings in the New Orleans area saw one of the nation's biggest gains at 2.1%, compared to last year, according to Zillow. The typical home value was just under $250,000.
- The other national markets that saw the biggest June gains were also those with lower average home values than the roughly $350,000 national level.
Zoom out: The "handcuffs" are 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.
Between the lines: 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.