#USA #Austin #Housing Market #Realtor.com #Lock-in Effect

Rising Monthly Payments Trap U.S. Homeowners in Place

According to a recent report from Realtor.com®, a significant increase in monthly mortgage payments is creating a substantial "lock-in effect" for homeowners in the United States. This phenomenon is causing many homeowners to feel trapped in their current residences due to the daunting cost of purchasing a new home in the current market.

As of December 2025, the typical monthly payment for existing homeowners is approximately $1,300. However, the cost required to buy a median-priced home has skyrocketed to nearly $2,236, marking an alarming 73.2% increase in monthly payments. This discrepancy has been identified as a core reason contributing to the low mobility rate and reduced inventory in the housing market.

Danielle Hale, Chief Economist at Realtor.com®, notes, "The lock-in effect isn't just a theoretical concept; it's very much influencing the decisions of homeowners across America. When faced with an increase of nearly $1,000 a month just to move, many households find it nearly impossible to adjust their budgets accordingly, leading them to stay put. The exceptionally low mortgage rates seen during 2020 and 2021 have turned into a form of 'golden handcuffs', significantly curbing fresh listings in local housing markets."

The Impact of Rising Mortgage Rates

The situation can be attributed to the historical context of mortgage rates over the past few years. The unprecedented low rates during 2020 and 2021 led to a surge in refinancing and home purchasing, with over a quarter of existing mortgages originated during this peak period. However, following the rate increase that began in 2022, the origination activity dwindled dramatically, as only 22.1% of outstanding mortgages were created from 2022 through August 2025. This translates to homeowners who secured lower rates paying considerably less each month compared to new buyers, further widening the gap and reinforcing the lock-in effect.

Lock-in Effects in Different Markets

Interestingly, while the lock-in effect hits homeowners hard nationally, its intensity varies across different regions. In more affordable markets, the increase in monthly payments needed to buy a typical home is less dramatic than the national average. For instance:

• - Pittsburgh, Pennsylvania: Homeowners see a 32.5% increase in payment.
• - Baltimore, Maryland: The increase is 34.0%.
• - Buffalo, New York: Owners face a gap of 34.8%.

Hannah Jones, Senior Economic Research Analyst at Realtor.com®, points out, “While less expensive markets impose the smallest financial penalty for relocating, they still faced rising costs from previous lower rates, meaning many owners do not cling to those very low rates anymore. Consequently, their relocation expenses are still significant.”

Challenges in High-Priced Markets

In stark contrast, affluent metropolitan areas demonstrate the most crippling lock-in effects. Higher property values necessitate larger mortgage amounts, exacerbating the strain from increased monthly payments. Markets such as:

• - San Jose, California: Homeowners experience a staggering 179.6% increase.
• - Los Angeles, California: An increase of 176.4%.
• - Portland, Maine: A gap of 154.8%.

Increasing home prices and high mortgage costs continue to present formidable barriers for those seeking to relocate.

Strategies for Homeowners

For locked-in homeowners, the path to moving can be laden with financial complexities. Strategies include renting out their current home, downsizing, or relocating to areas with lower living costs. In order to revitalize the housing market and ease the conditions for homeowners feeling stuck, adjustments are needed in mortgage affordability, including sustained drops in rates, improved income growth, and moderated home-price increases over time.

In conclusion, as the housing market grapples with these challenges, understanding the implications of the lock-in effect is crucial for homeowners looking to make informed decisions about their living situations. Realtor.com® continues to be a trusted partner for individuals navigating the housing landscape, providing invaluable insights and tools to effectively address these evolving circumstances.

About Realtor.com®

Realtor.com® has been a trailblazer in online real estate for over 25 years, connecting buyers, sellers, and renters with valuable insights and guidance. Recognized as the leading site trusted by real estate professionals, Realtor.com® prides itself on facilitating meaningful connections while offering a robust array of marketing tools to foster business growth.