In the New York City suburb of Westchester County, shopping for a home in an era of high interest rates is a competitive sport—not an opportunity for a deal.  

“They should bid at least the asking price if they want to get the house,” said Maria Skamangas, an agent with William Raveis in the county. “Nine out of 10 of my clients are dropping mortgage contingencies, and some of them are dropping inspection contingencies just to be in the running.”

A year into the biggest rise in mortgage rates in a generation, sales are still down across the U.S., as expected. But the price correction that was anticipated to follow never happened—and likely won’t. That’s because unlike in the 2008 recession, those plunging sales never led to a pile-up of inventory. Quite the opposite: most homeowners, with low rates already locked in on their houses, are choosing not to list them for sale, even if they’d like to.

“Sellers are wedded to their low rates,” said Jonathan Miller, president of appraiser Miller Samuel Inc. “It’s hard to convince somebody that’s got a 2.75% mortgage rate to become a buyer and pay 6.5%.”

Home listings in many markets are well below where they were before the start of the pandemic, and still down from a year ago. Houston-area home listings were down 7.1% in February from the previous year—and down 23% since February 2020, according to Miller Samuel and brokerage Douglas Elliman Real Estate. A the same time, the median price of sales that closed that month was down just 3.8%.

“Price correction means more than 10% suddenly,” Miller said. “In 2008, we were looking at a 30 to 40 percent drop in a quarter or two—and that 30 to 40 percent drop was everywhere.”

Today, he said, “There’s no correction. That’s how I look at it because low inventory is providing a firm underpinning.”

In New York, March listings declined 13% in Westchester and 31% in Long Island,  Miller Samuel Inc. and Douglas Elliman Real said in a report this week. Homes and condos that sold in Westchester in February did so at a median price of $655,500—or 2.4% higher than a year earlier, the firms said.

In Los Angeles County, sales inventory in March plunged 18% to 1,743. The median sale price of closed deals was down 6% in February, an adjustment partially accounted for by a shift in the type or size of homes that are selling, Miller said. However, the median price is still 23% higher than it was in February 2020, the firms said.

And in Miami—where new single-family listings plunged 10 percent in March—the median
price of all sales closed in February was up 8.1% from a year earlier, according to Miller Samuel and Douglas Elliman. Median prices in Miami are 50% higher than they were before the pandemic.

“This is probably the most challenging market I have been in ever,” said Skamangas, who’s been a
broker in Westchester County for over 30 years. “I have never seen such low inventory.”

A new listing in her area can prompt as many as 50 agents to immediately vie for it,
Skamangas said. Clients looking to purchase homes have made peace with 6% mortgage rates, and know that they can’t count on lower home prices as a way to recoup the higher costs of borrowing.

Both buyers and sellers are unhappy, said Miller. “The sellers aren’t going to get the prices they might have gotten in 2021 or early 2022, and buyers aren’t going to see substantial improvements in affordability.”

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