Some of it is logical (selling a leverage asset at a loss when you can just live in it / if you sell you give up your below-market-rate mortgage) and some of it is emotional (people like to win).
So as mortgage rates approach 4-5% range (not that far off, we've already dropped from 7.8% to 6.6% in 2 months), homes will start moving again. People need to upgrade/downgrade/move/etc, and the marginal cost will start to compress and make it worthwhile again.
As an example - I have a typical 2018-2020 ZIRP bottom barrel interest rates.. So while the apartment upstairs from me which is on sale for 25% more than my apartment purchase price, it would have actually cost me 75% more in monthly payments at peak interest rates. At current interest rates it is 58% higher payments, and at 4.5% it would be about 31% higher payments (pretty close to proportional to price).
So I think somewhere in the 4-5% range things get pretty normal pretty quick.
Some of it is logical (selling a leverage asset at a loss when you can just live in it / if you sell you give up your below-market-rate mortgage) and some of it is emotional (people like to win).
So as mortgage rates approach 4-5% range (not that far off, we've already dropped from 7.8% to 6.6% in 2 months), homes will start moving again. People need to upgrade/downgrade/move/etc, and the marginal cost will start to compress and make it worthwhile again.
As an example - I have a typical 2018-2020 ZIRP bottom barrel interest rates.. So while the apartment upstairs from me which is on sale for 25% more than my apartment purchase price, it would have actually cost me 75% more in monthly payments at peak interest rates. At current interest rates it is 58% higher payments, and at 4.5% it would be about 31% higher payments (pretty close to proportional to price).
So I think somewhere in the 4-5% range things get pretty normal pretty quick.