Overview:

• This episode explores the current crisis in the housing market, examining why buying and selling homes might be more challenging than ever before.

Key Points:

• Why Sellers Are Hesitant:
  • Selling a house means giving up a low mortgage rate (often as low as 2-4%) that homeowners currently enjoy.
  • Homeowners with mortgages from 2012 to 2021 likely refinanced to secure these low rates.
  • Those with cash homes are in a strong position but may hesitate to sell due to the need for higher mortgages or more cash for upgrading.
• Challenges for Buyers:
  • Home prices remain high, influenced by the soaring market in 2020-2022.
  • Sellers may hold onto their properties unless they can secure a high price, often driven by low mortgage rates.
• The Discrepancy Between Purchase Price and Market Value:
  • Sellers may have mortgages at a low interest rate, meaning they are reluctant to sell unless they can secure a high price.
  • A significant gap exists between older mortgage payments and what buyers might face today with rising mortgage rates.
• The Impact of Property Taxes:
  • Property taxes are based on the original purchase price of the home, not current market value, creating a disparity between taxes for older homeowners and newer buyers.
  • Example: A homeowner bought their house in 2015 for $370K, with taxes of $2,800/year. The same house recently sold for $680K, with taxes now over $5,800/year, making it less appealing to sell.
• Conclusion:
  • Both buyers and sellers face significant financial challenges, which could contribute to a slowdown in the housing market.

Why This Matters:

• Understanding the dynamics of mortgage rates, property taxes, and market conditions helps clarify why the housing market may be stuck in a crisis.

Listen to this episode to gain insight into the current housing market crisis and what it means for buyers and sellers.