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Lock-In Effect: Shaping the Housing Market

Thank you to the excellent Calculated Risk substack for pointing out a fascinating working paper from the Federal Housing Finance Agency (FHFA) that attempts to quantify the impact of the “lock-in effect” of people with lower mortgage rates not wanting to sell their homes, as they would have to buy a new home at today’s much higher interest rates.

The paper concludes that the supply reduction from the lock-in effect has increased prices by 5.7% (!) and has prevented approximately 1.33 million sales between 2Q2022 and 4Q2023.

Ian Colville – CEO


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