There are two kinds of buyers, “have to” and “want to” buyers. When mortgage rates were under 3% (which meant that money was as cheap as it has ever been) everyone who considered buying a house, bought one. Then money got more expensive, mortgage rates went from 2.6% in 2021 to 5% in 2022 and today they are 6.64%. For every 1% increase in mortgage rates, monthly mortgage payments increase by 10%. Those increases over the past 4 years eliminated the “want to” buyers and left only the “have to” buyers.
For nearly 25 years we would see about 5M resale transactions a year, nationally. Those included both kinds of buyers. But with mortgage rates at their highest levels in over 20 years, most of those “want to” buyers opted not to buy. And we learned that those “have to” buyers make up about 4M of those resale transactions nationwide. This is why industry participants say we are in a soft market. Transactions are down about 20% below normal and this is the 4th year of that trend.
But there is light at the end of the tunnel. Sales are increasing over last year, if only by a small margin. Improvement is improvement. Slow and steady is what brings more buyers into the market. Buyers get spooked by big drastic changes. 2026 is better than 2025 and it is likely that 2027 will be better than 2026. As the market continues to improve, we will bring back more of our “want to” buyers. Onwards and upwards!
PS declining supply and small growth in demand drives stable prices. Stability may not be exciting, but it is what buyers love and we need to always offer love.
Bonus: Ever wonder why soccer players are sooooooo fit? It is because they run 6-8 miles in each 90+ minute match. 17 basketball courts fit into one soccer pitch.
Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.