Golden Handcuffs Tying Couples Together

Often called “golden handcuffs,” historically low mortgage rates (sub 4%) have forestalled many potential seller’s plans. Rather than selling and losing extremely low interest rates, they are choosing to sit tight. The result has been record low numbers of homes hitting the market the past three years which has, ironically, driven prices higher and exacerbated the issue. Even with the recent downward movement in interest rates, the effect has not been enough to compel significant numbers of homeowners to bite the bullet and sell. 

As a result, we are seeing a fundamental shift in homeowner mindsets. A recent survey by Clever Real Estate revealed that a whopping 61% of the baby boomer homeowners polled say they intend to live in their homes the rest of their lives (never sell). As I chat with boomer friends, I hear them saying the same and, ironically, this includes my husband and myself. 

This fact will obviously affect available inventory in the years to come as a significant percentage of the aging population is choosing to stay and renovate rather than sell. There is another group, however, that historically have sold their homes but now, due to low-interest rate mortgages, are doing whatever they need to do to hang onto their property and keep their existing rates. 

Divorcees. 

Just a few short decades ago, lower home prices made it possible for one of the divorcing partners to buy out the other and remain in the home. Currently higher interest rates coupled with home prices in Alameda County averaging way over a million dollars, buying out the partner’s share is out of reach for many. 

Rather than sell and lose their low rates, couples looking to separate are coming up with creative solutions. The easiest way forward is for one of them to simply move down the hall. Others are relocating nearby with both couples sharing the costs of both locations and both remaining on title of the original home. Increasing numbers are plugging into counseling hoping to resolve their differences rather than part ways. This adds irony to the phrase “golden handcuffs” as couples cannot afford to completely separate.

One thing is obvious: low interest rates were great, but are having unintended consequences.