Markets That Stand To Gain The Most From Falling Mortgage Rates

While lower mortgage rates are welcome news for all homebuyers across the nation, markets with a high percentage of owner-occupied homes with a mortgage are expected to see the most changes, according to a new Realtor.com study. The effects should vary based on mortgage usage, so 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 higher use 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 of 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."

Researchers from Realtor.com forecast 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 should offer some reprieve to homebuyers who have been sidelined in recent years, and encourage more to come into the market.

Metros With The Highest Share Of Owner-Occupied Homes With A Mortgage

More than half of outstanding mortgages have a rate of 4% or lower, and roughly three-quarters have a rate of 5% or lower, Realtor.com reports. Today, mortgage rates are hovering around 6%, reaching this level for the first time since September 2022. Realtor.com researchers conclude that many homeowners have chosen to stay put "for the time being," adding that prospective homebuyers are "holding off on listing their home for sale until mortgage rates come down further."

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

Metros With The Highest Share Of Owner Occupied Homes Without A Mortgage

Markets that have a higher share of outright ownership will be insulated from the impact of lower mortgage rates. New Orleans stood out with the highest share of homeowners who own their homes outright among the 50 largest markets, at 45.8%.

• New Orleans-Metairie, La. - 45.8%
• Buffalo-Cheektowaga, N.Y. - 45.2%
• Pittsburgh, Pa. - 45.2%
• Miami-Fort Lauderdale-Pompano Beach, Fla. - 43.8%
• Tampa-St. Petersburg-Clearwater, Fla. - 42.9%
• Detroit-Warren-Dearborn, Mich. - 41.7%
• Birmingham-Hoover, Ala. - 41.5%
• Houston-The Woodlands-Sugar Land, Texas - 41.2%
• Oklahoma City, Okla. - 41.0%
• 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