Trend 1: Homeowners feel stuck
More than one in five homeowners would like to move before the end of 2023. But only one in 10 of those homeowners feel like the move will happen.
Homeowner break down
Why? Blame affordability. Of those who want to move but don’t think they will, most cited high mortgage rates and high home prices as the reason why not. Interestingly, inventory doesn’t seem to be much of a concern any longer — only about 5 percent cited a lack of choice.
What would stop you from moving in your desired timeframe?
We also asked those who cited home prices as the reason they’re stuck what would need to happen to “unstick” them.
How much of a decline in home prices would there need to be for you to consider purchasing another home in the next 6-12 months?
Trend 2: Homeowners Believe Mortgage Rates Will Stay High
Homeowners don’t hold out much hope that mortgage rates will decline in the next year. We asked all homeowners what they thought would happen. Most said they would be at least somewhat higher than they are now.
Do you think mortgage rates will be higher, lower or the same in 12 months? (Today’s rate is between 7-7.5%)
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Trend 3: Stuck Homeowners Want to Renovate, but High Interest Rates Mean Cash is King
More than half of the homeowners (59%) want to do renovations on their current home. But how they will pay for it is interesting, with cash being the most common.
How will you pay for renovations?
We asked those who said they wouldn’t get a HELOC or cash-out refi why not. High interest rates was the most common reason, followed by having enough cash on hand.
Why don’t you want a cash-out refinance or a home equity line of credit to pay for your renovations?
Conclusion: What does it all mean?
It’s not surprising that homeowners — especially those who want to move — are shaken by current mortgage rates, which negatively impact affordability. It’s also telling that homeowners are avoiding high-interest loans against their equity. The real estate market will always be cyclical, but the fact is, people need to move for myriad reasons — so in 2023, we expect to see these numbers change as people start to buy homes again in greater numbers. They may be doing it out of necessity at first, but that will change.
We were also not surprised to see the reluctance of homeowners to get a cash-out refinance. Homeowners are looking for an alternative to interest-based financing. At Point, our home equity investments are not based on interest, and we’ve seen demand 3x in the third quarter of 2022 compared to 2021. We expect that to continue for some time, as the Fed seems likely to raise rates again, albeit at a slower pace.