With Falling Mortgage Rates, These Markets Are Likely to See the Most Changes: New Realtor.com® Study

Rhea-AI Summary

Realtor.com® has released a new study analyzing the potential impact of falling mortgage rates on various real estate markets. The study focuses on markets with a high percentage of owner-occupied homes with mortgages, which are likely to see the most significant changes. Washington D.C., Denver, CO., Raleigh, N.C., Virginia Beach, VA, and Portland, OR top the list with the highest share of mortgaged homeowners.

Key findings include:

• Markets with high mortgage utilization may be more sensitive to rate changes
• Mortgage rates are expected to stay in the low 6% range through year-end
• New Orleans, LA has the highest share of outright homeownership at 45.8%
• Markets with higher homeownership rates tend to have more outright ownership
• Older homeowners (65+) correlate with higher outright homeownership rates

The study suggests that as mortgage rates decline, real estate activity is likely to increase in markets with high mortgage utilization.

Positive

• Mortgage rates are expected to decline, potentially reaching the high 5% range by next spring
• Lower rates may encourage more buyers to return to the real estate market
• Markets with high mortgage utilization are likely to see increased real estate activity as rates decline

Negative

• Current market rates still exceed rates for most existing homeowners, potentially limiting their options
• Markets with higher outright ownership may be less impacted by falling mortgage rates, potentially leading to uneven market recovery

Washington D.C.; Denver, CO.; Raleigh, N.C.; Virginia Beach, VA; and Portland Ore., markets lead the top 5 with the highest share of mortgaged homeowners

SANTA CLARA, Calif., Oct. 8, 2024 /PRNewswire/ -- As the Federal Reserve begins lowering mortgage rates, markets with a high percentage of owner occupied homes with a mortgage stand to see the most changes in their real estate market according to a new study from Realtor.com^®. The effect of lower mortgage rates will differ across markets based on mortgage usage and 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 the high utilization of mortgages. 

"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, 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. As mortgage rates decline, real estate sales activity is expected to pick up in these areas."

Following the Fed's announcement of a big rate cut in September, we expect mortgage rates to stay in the low 6% range through the end of the year, 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.

Metros with the highest share of owner occupied homes with a mortgage

1. Washington-Arlington-Alexandria, DC-Va.-Md.-W.V. - 74.7%
2. Denver-Aurora-Lakewood, Colo. - 72.4%
3. Raleigh-Cary, N.C. - 72.0%
4. Virginia Beach-Norfolk-Newport News, Va.-N.C. - 71.0%
5. Portland-Vancouver-Hillsboro, Ore.-Wa. - 69.8%
6. Baltimore-Columbia-Towson, Md. - 69.5%
7. Seattle-Tacoma-Bellevue, Wash. - 69.4%
8. Atlanta-Sandy Springs-Alpharetta, Ga. - 69.4%
9. Indianapolis-Carmel-Anderson, Ind. - 69.0%
10. San Diego-Chula Vista-Carlsbad, Calif. - 68.9%

Markets with a higher share of outright ownership could exhibit a degree of insulation from the impact of lower mortgage rates. Notably, New Orleans, La. stood out with the highest share of homeowners who own their homes outright among the largest 50 markets at 45.8%.

Metros with the highest share of owner occupied homes without a mortgage

1. New Orleans-Metairie, La. - 45.8%
2. Buffalo-Cheektowaga, N.Y. - 45.2%
3. Pittsburgh, Pa. - 45.2%
4. Miami-Fort Lauderdale-Pompano Beach, Fla. - 43.8%
5. Tampa-St. Petersburg-Clearwater, Fla. - 42.9%
6. Detroit-Warren-Dearborn, Mich. - 41.7%
7. Birmingham-Hoover, Ala. - 41.5%
8. Houston-The Woodlands-Sugar Land, Texas - 41.2%
9. Oklahoma City, Okla. - 41.0%
10. Cleveland-Elyria, Ohio - 40.5%

Age and High Homeownership Rates Also Create More Insulated Markets
Markets with higher homeownership rates tend to have a greater share of outright ownership. Additionally, there is a strong correlation between a larger proportion of older homeowners (aged 65 and above) and the prevalence of outright homeownership.

In markets with elevated homeownership rates, individuals typically purchase homes at a younger age. As property values appreciate over time, homeowners can leverage the accumulated equity to either refinance their mortgages or sell and downsize, avoiding the need for new mortgage debt. This trend is particularly beneficial for older homeowners, who have had more time to benefit from both home value appreciation and equity growth

Metro Areas Where Mortgages are Most Common

Metro	% of Owner Occupied Homes With A Mortgage	% of Owner Occupied Homes Without A Mortgage
Washington-Arlington-Alexandria, DC-VA-MD-WV	74.7 %	25.3 %
Denver-Aurora-Lakewood, CO	72.4 %	27.6 %
Raleigh-Cary, NC	72.0 %	28.0 %
Virginia Beach-Norfolk-Newport News, VA-NC	71.0 %	29.0 %
Portland-Vancouver-Hillsboro, OR-WA	69.8 %	30.2 %
Baltimore-Columbia-Towson, MD	69.5 %	30.5 %
Seattle-Tacoma-Bellevue, WA	69.4 %	30.6 %
Atlanta-Sandy Springs-Alpharetta, GA	69.4 %	30.6 %
Indianapolis-Carmel-Anderson, IN	69.0 %	31.0 %
San Diego-Chula Vista-Carlsbad, CA	68.9 %	31.1 %
Minneapolis-St. Paul-Bloomington, MN-WI	68.9 %	31.1 %
Sacramento-Roseville-Folsom, CA	68.9 %	31.1 %
Charlotte-Concord-Gastonia, NC-SC	68.7 %	31.3 %
Riverside-San Bernardino-Ontario, CA	68.6 %	31.4 %
Columbus, OH	68.3 %	31.7 %
Richmond, VA	68.1 %	31.9 %
Los Angeles-Long Beach-Anaheim, CA	67.9 %	32.1 %
San Francisco-Oakland-Berkeley, CA	67.7 %	32.3 %
Boston-Cambridge-Newton, MA-NH	67.6 %	32.4 %
Nashville-Davidson--Murfreesboro--Franklin, TN	66.6 %	33.4 %
Las Vegas-Henderson-Paradise, NV	66.5 %	33.5 %
Austin-Round Rock-Georgetown, TX	66.3 %	33.7 %
San Jose-Sunnyvale-Santa Clara, CA	65.7 %	34.3 %
Phoenix-Mesa-Chandler, AZ	65.6 %	34.4 %
Providence-Warwick, RI-MA	65.5 %	34.5 %
Cincinnati, OH-KY-IN	65.5 %	34.5 %
Milwaukee-Waukesha, WI	64.9 %	35.1 %
Chicago-Naperville-Elgin, IL-IN-WI	64.1 %	35.9 %
Hartford-East Hartford-Middletown, CT	64.0 %	36.0 %
Jacksonville, FL	64.0 %	36.0 %
St. Louis, MO-IL	63.6 %	36.4 %
Kansas City, MO-KS	63.6 %	36.4 %
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	63.6 %	36.4 %
Louisville/Jefferson County, KY-IN	63.4 %	36.6 %
Orlando-Kissimmee-Sanford, FL	63.3 %	36.7 %
Dallas-Fort Worth-Arlington, TX	62.8 %	37.2 %
Memphis, TN-MS-AR	62.2 %	37.8 %
New York-Newark-Jersey City, NY-NJ-PA	61.0 %	39.0 %
San Antonio-New Braunfels, TX	60.2 %	39.8 %
Rochester, NY	59.6 %	40.4 %
Cleveland-Elyria, OH	59.5 %	40.5 %
Oklahoma City, OK	59.0 %	41.0 %
Houston-The Woodlands-Sugar Land, TX	58.8 %	41.2 %
Birmingham-Hoover, AL	58.5 %	41.5 %
Detroit-Warren-Dearborn, MI	58.3 %	41.7 %
Tampa-St. Petersburg-Clearwater, FL	57.1 %	42.9 %
Miami-Fort Lauderdale-Pompano Beach, FL	56.2 %	43.8 %
Pittsburgh, PA	54.8 %	45.2 %
Buffalo-Cheektowaga, NY	54.8 %	45.2 %
New Orleans-Metairie, LA	54.2 %	45.8 %
Data source: 2023 ACS 1-Year Estimate

About Realtor.com^®
Realtor.com^® is an open real estate marketplace built for everyone. Realtor.com^® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com^® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com^® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com^®.

Media Contact
Mallory Micetich, press@realtor.com

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SOURCE Realtor.com

FAQ

Which markets are likely to see the most changes due to falling mortgage rates?

According to the Realtor.com® study, the markets likely to see the most changes are Washington D.C., Denver, CO., Raleigh, N.C., Virginia Beach, VA, and Portland, OR. These areas have the highest share of owner-occupied homes with mortgages.

What are the expected mortgage rates for the end of the year?

The study predicts that mortgage rates will stay in the low 6% range through the end of the year, with potential declines reaching the high 5% range by next spring.

Which metro area has the highest share of outright homeownership?

New Orleans-Metairie, LA has the highest share of homeowners who own their homes outright among the largest 50 markets, at 45.8%.

How might falling mortgage rates affect real estate sales activity?

As mortgage rates decline, real estate sales activity is expected to pick up, especially in areas with a high percentage of mortgaged homeowners.

What factors contribute to higher rates of outright homeownership in some markets?

Markets with higher homeownership rates and a larger proportion of older homeowners (aged 65 and above) tend to have a greater share of outright ownership. This is due to longer periods of home value appreciation and equity growth.