How lock-in, price-anchored sellers, investor firms and flippers shape sales, prices and rents in Frederick County, Maryland, with scenarios to 2030.
The model reproduces the pattern Frederick County has shown since 2022: sales fall sharply while prices hold. In a simulated rise in mortgage rates from 3% to 7%, sales fall 17% and prices rise 8%. Two behaviours account for this. Owners with low-rate mortgages stop moving, and owners who will not sell below their purchase price withdraw or rent out instead of cutting their price.
| Measure | Latest | A year earlier |
|---|---|---|
| Median sale price (Redfin, Nov 2025) | $445,000 | $500,000 |
| Homes sold in the month | 250 | 285 |
| Days on market (Redfin) | 46 | 40 |
| Median days on market (Realtor.com, Sep 2026) | 37 | 30 (July 2025) |
| FHFA price index, change in 2025 | 0.9% | 7.4% (2024) |
| Rent, 3-bedroom house (Rentometer, Jan 2026) | $2,700/mo | — |
At the median price, with 10% down at 6.62%, the mortgage payment is about $2,563 a month before tax and insurance, close to the $2,700 rent on a 3-bedroom house. Buying also takes about $58,000 in down payment and closing costs. Would-be buyers keep renting, owners with low rates stay put, and fewer homes change hands.
Standard price models work with county averages: average income, average rate, average price. The behaviours that drive this market differ from household to household. An owner with a 3% mortgage and one with a 7% mortgage respond to the same market in opposite ways. A seller who paid $500,000 last year will not accept $460,000; one who paid $200,000 in 2012 will.
This model gives every household its own income, savings, mortgage rate and purchase price. Each follows a few simple rules, and county-level prices, rents and sales are the sum of their trades. Because any rule can be switched off and the same history replayed with the same random draws, the model measures how much of an outcome each behaviour causes.
| Agent | Rule |
|---|---|
| Owners | Move rarely in their first two years (2.4% a year), then about 7% a year. Each point their rate sits below the market rate cuts that chance by 9% (lock-in). |
| Flexible sellers | 60% of owners. List near the market price and follow it down until they sell. |
| Price-anchored sellers | 40% of owners. Will not sell below their purchase price plus 5%. After 6 months unsold, half withdraw and half rent the home out. |
| Renters | Save 8% of income. Look to buy once they have 10% down plus closing costs and the payment is under 30% of income. |
| Investor firms | Own 12% of single-family homes at the start. Buy when a year’s rent is at least 7.0% of the price; sell when it falls below 4.5%, never at a loss. |
| Flippers | Buy when prices are up 4% or more on the year, renovate for 6 months and list 8% above market. Must cover 10% costs; cut to market after six months unsold. |
| Builders | Add about 1.6% to the housing stock a year, listed near the market price. |
Prices rise when there are fewer than six months of homes for sale and fall when there are more, and they track actual sale prices, so a renovated home that sells at a premium lifts the market slightly. Rents rise when rental vacancy is below 5% and fall when it is above. Nothing else is imposed: prices, rents, sales, ownership and length of stay all come from the trades.
Mortgage rates rise from 3% to 7% over eighteen months. The run is repeated with lock-in switched off, then with price-anchored sellers switched off, using the same random draws each time.
Sales fall 17% because owners with low rates stop moving; without lock-in, sales rise 4%. Prices rise 8% because price-anchored sellers wait or rent out rather than cut; without them, prices fall 4%. At the peak about 2,600 homes are rented out by would-be sellers. That added supply holds rent growth to 6.5%, against 7.2% without them.
Length of stay also rises. The median owner had been in their home 8.9 years before the shock and 11.2 years at the end of the run. No rule sets this directly; it follows from lock-in.
Mortgage rates fall from 6.5% to 3.5% over eighteen months, with flippers active and then switched off.
Flippers buy because prices are rising, which makes prices rise faster. They stop buying when yearly price growth drops below 4%, so their contribution lasts only as long as the momentum.
Three mortgage-rate paths from today’s market: rates hold near 6.6%, fall to 5.25%, or rise to 7.5%, each reached over two and a half years.
| Rate path | Price change | Sales change | Rent change | Investor share of purchases, 2030 | Median years in home, 2030 |
|---|---|---|---|---|---|
| Rates hold near 6.6% | +28% | −16% | +8% | 23% | 11.2 |
| Rates fall to 5.25% | +28% | −15% | +8% | 21% | 11.0 |
| Rates rise to 7.5% | +29% | −18% | +8% | 25% | 11.3 |
Each run starts with 6,000 households, each standing for about 17 real ones, and steps forward one month at a time after a two-year settling period at the starting rate (scenarios add one more year at today’s rate before 2026). Each month, in order: incomes grow and renters save; owners decide whether to move; investors, would-be sellers renting out and flippers decide whether to list; builders add homes; buyers search; sellers accept any offer at or above their price; unsold listings age and some are withdrawn; prices and rents adjust.
Inputs come from public data where available: incomes, ownership rate, prices, rents, building pace, and the lock-in effect measured by Fonseca and Liu (2023). Other settings use typical values and are tested in the experiments above. Results are medians of 10 to 12 runs. Experiments compare runs that share their random draws, so differences come from the rule switched off.