The current tight housing market is often reduced to a generational standoff: baby boomers are holding onto their houses, keeping out millennial buyers.
New research from the real-estate marketplace Zillow shows where in the US the standoff could ease. It boils down to some hard-to-change factors: Many current homeowners have a "rate lock-in," meaning their current interest rate is lower than what they would be quoted if they tried to get a new mortgage today.
These homeowners are financially disincentivized from moving, even if they found a house similarly priced to their current one.
The key to opening up the market might be the lucky households that are free from this "rate lock-in." Zillow found that boomers, aged 60 to 78, and the Silent Generation, aged 79 to 96, had the highest percentage of homeowners "free of rate lock-in," at 17% and 14%, respectively. Meanwhile, millennials (28 to 43) and Gen Z (27 and younger) were at the bottom, with 6% and 4% "free of rate lock-in," respectively.
Zillow went further and identified 10.8 million homeowners, or nearly 13% of the national total, who it labeled "mortgage-free and mortgage-ready," meaning these households are not only mortgage-free but could "comfortably afford" a new one at current rates as well.
These are the households best positioned to move, and if they choose to, could open up new inventory for prospective buyers — which are often younger generations trying to get a foothold in the housing market.
Zillow found that the five cities with the largest clusters of these households tended to be in the former Rust Belt of the Northeast and Midwest, defined by its manufacturing legacy. Those areas also top lists of the regions in the country with the lowest cost of living.
Here are the five cities Zillow highlighted with the most homeowners primed to move and list their homes — giving worn-out younger buyers the best shot at buying a home.