Are we experiencing a quiet quitting housing market?

Quiet quitting is when an employee disengages from their work and organization without formally resigning. Surprisingly, the term quiet quitting housing market is now acquiring a new significance for the United States. Let’s find out what it actually means. 

What is quiet quitting in the real estate industry?

Quiet quitting housing market is basically when homeowners choose to hold onto their properties instead of selling them and taking advantage of favorable selling opportunities. While this unique phenomenon is across geographic locations, it’s notably pronounced in areas marked by high housing costs and low housing inventories. 

Demographic and financial factors play a significant role in influencing participation in quiet quitting. For example, older homeowners, those burdened with substantial mortgage balances, and individuals without immediate plans for relocation are more inclined to engage in this trend. 

What were the warning signs of quiet quitting?

Typically, spring is a bustling time for the housing market. Many people think about moving or upgrading to a new house. However, 2023 was different. In April 2023, only 392,000 homes were listed for sale, a drop from 498,000 the previous year. And, well below the 552,000 listed in April 2019.

So, why the change? It’s because of interest rates. A recent study by Redfin found that nearly 92% of U.S. homeowners have a mortgage rate below 6%. But today, the rates have gone up considerably. This makes homeowners hesitant to sell their property. In simple terms, homeowners are choosing to stay put in their current homes because moving could mean much higher monthly mortgage payments. This unusual trend led Redfin’s chief economist to suggest that homeowners are ‘quiet quitting’ the housing market

Why is there a quiet quitting housing market?

The unique trend of owners quiet quitting the real estate market has emerged as a result of a few forces: 

Increased mortgage rates

Recent months have seen a notable surge in mortgage interest rates, making borrowing for new homes more costly. This rise discourages homeowners from selling their current properties to move up to larger or more luxurious homes.

Economic uncertainty

A shadow of economic uncertainty hangs overhead. With the Federal Reserve actively combating inflation through interest rate hikes, homeowners are exercising caution in parting with their properties.

Limited housing inventory

Many regions nationwide are experiencing historically low home availability. This scarcity grants homeowners greater negotiating power, prompting some to choose to stay put to secure the most advantageous selling prices.

Personal considerations

Beyond economic factors, personal circumstances are pivotal. Job changes, health issues, and other individual situations can lead homeowners to embrace quiet quitting. They want to prioritize stability over financial gains.

What can be the repercussion of a quiet quitting housing market in the USA?

The quiet quitting trend has a ripple effect on the dynamics of the US housing market, influencing it in various ways:

Further shortage in the housing inventory

The already limited inventory levels face further strain due to the prevalence of quiet quitting. With fewer properties hitting the market, prospective buyers encounter increased challenges in finding suitable homes.

Driving home prices upward

Homeowners’ hesitancy to sell amid high home prices contributes to an upward pressure on property prices. The scarcity of available homes on the market intensifies competition among buyers, potentially pushing prices even higher.

Challenges for homeowners seeking relocation 

Homeowners needing to relocate, whether due to job changes, certain life events, or other reasons, encounter difficulties. The scarcity of housing options complicates their search for new homes, potentially resulting in delays or the need for compromises.

Is this trend here to stay?

The persistence of quiet quitting appears closely tied to interest rates and economic uncertainties. As long as mortgage rates remain elevated and economic ambiguities endure, the trend is likely to continue. However, any shift towards lower interest rates and a more stable economic outlook could potentially trigger a reversal in the prevalence of quiet quitting among homeowners.

Last thoughts

This trend of homeowners quiet quitting the housing market can shape the equilibrium between supply and demand, along with impacting pricing dynamics. Predicting the precise trajectory of the quiet quitting trend poses a challenge. Nonetheless, its potential ramifications on the US housing market are noteworthy. If the trend persists, it could intensify constraints on housing availability, exacerbating the ongoing trend of price increases. On the flip side, a reversal of this trend has the potential to alleviate some of the existing market pressures.

Written by Ramona Sinha. December 16, 2023

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.