Golden handcuffs lock up D.C.'s housing supply

Nearly all (93%) mortgage-holding homeowners in D.C. have a rate below 6%, per Redfin data shared with Axios. That's leaving homeowners locked into place, and 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: Only 7.3% of D.C. homeowners with a mortgage had a rate above 6% as of late 2022.

• Meanwhile, about a quarter — 26.6% — had a mortgage rate below 3%.
• And roughly 40% had a rate between 3 and 4%.

What they're saying: For the last 15 consecutive months, fewer listings have hit the D.C. market, president-elect of the Greater Capital Area Association of Realtors Christopher Suranna says.

• Buyers are adjusting to the higher mortgage rates, but homeowners, with their 3% mortgage rates, aren't budging, he said.

Zoom in: Matt Hendrickson refinanced his Chevy Chase D.C. home, securing a 2.6% rate. His monthly payment is now $650 a month lower than it was when he bought it in 2017.

• "Between that savings and the surge in our home’s equity, we were able to build a weekend home in West Virginia," he said.
• Yes, but: He plans to keep his D.C. home (and sub-3% rate) "for life."

The big picture: The golden handcuffs phenomenon isn't new, but because mortgage rates have more than doubled, it's more stark than ever, Fairweather tells Axios.

Zoom out: It's not just a D.C. issue. Nine in 10 U.S. homeowners secured mortgage rates below 6%, per a national Redfin report. Meanwhile, mortgage rates have swung between 6% and 7% in the U.S. in recent months.

What's next: If mortgage rates drop closer to 5%, homeowners will start to list their homes and D.C.'s market could start to rebalance, Suranna says.

Go deeper: It could take the U.S. a decade to repair its housing shortage

Buying a median-priced home in D.C. requires a lot more cash than it did when rates were lower.

Yes, but: Buyers are also exploring adjustable-rate mortgages or buydowns in hopes of a lower monthly payment, Fairweather says.