Realtor.com Ranks Markets Most Likely to Change Due to Falling Mortgage Rates

(Illustration courtesy of Realtor.com)

As the Federal Reserve begins to lower mortgage rates, markets with a high percentage of owner-occupied homes with a mortgage stand to see the most change, according to a new study from Realtor.com.

The effect of lower mortgage rates will differ across markets based on mortgage usage, the report said. It noted homeowners in Washington D.C., Denver, CO., Raleigh, N.C., Virginia Beach, Va and Portland Ore., might be more sensitive to the impact of lower rates, given their comparatively high utilization of mortgages.

Other markets with a significant share of owner-occupied homes with a mortgage include Baltimore, Seattle and Atlanta.

“Having a mortgage with a low interest rate is a fantastic benefit to existing homeowners, but sometimes being in a great position can limit your options. Although mortgage rates have eased, market rates continue to exceed current rates for most homeowners keeping them locked in ‘golden handcuffs’,” said Danielle Hale, chief economist with Realtor.com. “In markets like Washington D.C. and Denver, Colorado, where almost 75% of owner-occupied homes have a mortgage, changes in market rates are likely to factor into buying and selling decisions for more homeowners.”

Real estate sales activity will likely pick up in these areas as mortgage rates decline, Hale said. The report said mortgage rates will likely stay in the low 6% range through the end of 2024, with further declines potentially reaching the high 5% range by next spring. “These lower rates will offer some relief to homebuyers who have struggled with high rates in recent years, likely encouraging more buyers to return to the market,” it said.