What is the lock-in effect and how does it impact housing?

The lock-in effect refers to homeowners holding onto existing mortgages with below-market interest rates, making them reluctant to sell or trade up despite changing market conditions. This behavior reduces available inventory, supporting home prices and slowing turnover. It forces more households to remain renters, sustaining strong rental demand. For investors, understanding this effect means focusing on cash-flow properties and recognizing how limited housing supply influences market trends through 2029.