After a year of repeated interest rate hikes that brought borrowing levels to the highest point in more than 20 years, the U.S. Federal Reserve recently signaled that rates might be coming down in 2024. 

Currently sitting between 5.25% and 5.5%, interest rates have increased payments on cars, credit cards and mortgages as federal officials seek to tame consumer spending and temper inflation. For homeowners, it’s created what real estate experts refer to as “golden handcuffs.” 

Essentially, homeowners who may want to sell their current property and downsize are choosing not to because they don’t want to forgo their current mortgage for a higher one. For homeowners who bought homes with fixed mortgages before interest rates shot up, they’re locked into payments that can be more than half of what a mortgage is today. 

“A lot of people have held off on buying and moving,” said Dana Cottrell, a realtor for the Summit Resort Group and incoming president of the Colorado Association of Realtors. “It used to be that a lot of older people would move and downsize. Now, a lot are aging in place, staying in their homes.”

Area brokers have attributed the trend, in part, to a decline in home sales in Summit County this year and last. Since 2015, the number of home sales each year has exceeded 2,000. But in 2022, sales dropped to around 1,500 with 2023 on track to finish with a similar amount, realtor data shows. 

Homes are also taking longer to sell, with the average days on the market rising from 31 in January to 47 in November. 

Prices for most homes, however, have not decreased but instead held flat for much of this year compared to last. The average price for a single-family home remains around $2 million while the price for a multifamily unit, such as a condo or townhome, sits around $950,000 — a slight increase from 2022. 

“I would normally expect that our prices would go down because the rates are so high, but there are other factors in our market that make things work in a way you don’t think they’re going to,” Cottrell said. 

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Summit County remains a vacation-home-dominated market. Nearly half of all home transactions are in cash, meaning these buyers don’t have to opt for a mortgage. And the area’s resort status and desirable living likely ensure it will remain a market with high price points regardless of national economic influence.

There are other factors, such as rising property taxes and increased home insurance fees, that will continue to hamper affordability for current homeowners and prospective buyers. 

“You are seeing this increase in property taxes and homeowner’s insurance that we haven’t seen, maybe ever, in Summit County to this degree,” said Dishon Lutz, a Summit County broker and president of the Summit Association of Realtors. 

Still, Lutz said since the Federal Reserve’s decision to keep interest rates steady earlier this month, he’s already seen a decrease in some mortgage offers. That’s because interest rates impact the money mortgage companies borrow to lend to homeowners. It’s signaled to lenders that rates may even come down next year, with the Federal Reserve eyeing three cuts in 2024, potentially.

“Just the indication alone that the Fed was going to drop interest rates a couple of times next year actually helped,” Lutz said. “I hope that it is a true translation into affordability, as opposed to just the hype.” 

Any interest rate declines would also be aided by a continued increase in housing inventory, which can keep home prices high when it is dramatically outweighed by demand, Lutz added. 

Lutz said he thinks next year “all in all, we are going to see more movement, especially going into the spring months.”

Cottrell said that while there are “so many factors besides interest rates that are driving our market,” the more those rates come down, “the more we’ll see demand increase.”