The Housing Market Is Locked
Why 3% mortgages are freezing supply and keeping prices stuck
A strange thing is happening in housing right now.
Rates have more than doubled.
Affordability has worsened.
And yet… prices haven’t fallen the way many expected.
Why?
Because the housing market didn’t break. It locked.
This chart tells the entire story:
Blue line (Sub-3%) → Homeowners who locked in ultra-low rates during 2020–2021
Orange line (6%+) → Buyers dealing with today’s higher rates
Look at the shift:
Sub-3% mortgages surged from ~3% to ~25%
6%+ mortgages dropped sharply… then came roaring back
Today, we have a market split in two.
The “Golden Handcuffs” Effect
If you have a 2.75% mortgage… why would you ever give that up?
Selling your home today likely means:
Taking on a 6–7% mortgage
A much higher monthly payment
Less house for the same budget
So what do people do? They stay.
Why Inventory Is So Low
This is the key dynamic:
Millions of homeowners are locked into ultra-low rates
They have no incentive to sell
New listings stay limited
Even as demand cools… supply stays even tighter.
That’s why prices haven’t dropped the way many expected
Why the Market Feels Frozen
We now have two different realities:
Existing homeowners → sitting on historically cheap debt
New buyers → facing today’s rates
Meanwhile:
Refinancing has dried up
Fewer people are moving
Transactions are down
Higher rates didn’t crash housing. They slowed it down.
What Happens Next?
Even if rates fall:
A homeowner at 3% isn’t rushing into 5–6%
The lock-in effect doesn’t disappear quickly
Supply likely stays constrained
This isn’t temporary. It’s structural.
If You Want to Go Deeper
We’ve been building this theme over time:
The Bottom Line
The housing market isn’t broken.
It’s stuck between two worlds:
Yesterday’s ultra-low rates
Today’s higher-rate reality
And until that gap closes… don’t expect a “normal” housing market anytime soon.