The housing market's comeback after the financial crisis has turned out to be a mixed bag.
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A likely shift in the mortgage market is creating 'prisoners' in housing
The likely rise in mortgage rates means that there will be less motivation for existing homeowners to move.
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Prices have recovered to pre-housing-crisis levels. But with slow wage growth, that means there are fewer affordable houses available to buyers, especially in bigger cities.
On the surface, the price trend ought to be good news for existing homeowners looking to sell. However, the likely rise in mortgage rates from historic lows means that there will be less incentive to move, according to
Since the 1980s, the long-term drop in interest rates created a built-in incentive to move, Fleming said. Even if a seller's income was unchanged, it was possible to effectively move into a lower mortgage rate, and so be able to even afford a slightly bigger home.
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Prisoners dilemma
In some cases, like when a homeowner is moving, the sell decision is easier to make, if not obligatory. Also, there's a level of home-price appreciation that makes selling an attractive prospect.
Get used to this new normal
The question, according to Fleming, then becomes whether new homes can be built quickly enough to catch housing stock up to demand.
This gap has created the most competitive buyers' market on record for existing homes, judging by how long homes stay listed, according to the National Association of Realtors. In April, existing homes listed for a record-low median of 29 days, the NAR said on Wednesday. Shorter listing times suggest buyers are snapping up houses as quickly as possible, indicating a hot market.
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