M
ortgage rates are slowly decreasing after the Fed's recent rate cuts, but this might not immediately ease the housing market. A phenomenon known as the "lock-in effect" could keep the market tight for a while longer. People who bought homes at low interest rates may be hesitant to sell, knowing they won't get such a good deal again.

    However, experts suggest that there are workarounds to navigate this challenge. When inventory is low, consider fixer-uppers or land to build on, advises Michael Kootchick, a real estate developer. He shares an example of how he developed a small housing community on vacant land during the last housing crisis and sold it out within 18 months.

    Another option is to build an Accessory Dwelling Unit (ADU) on your property, which can increase property values up to 35% in desirable areas. You can then rent the ADU to generate income or use it as a down payment on a new primary residence.

    Homeowners looking to move up can opt for a cash-out refinance to tap their equity and use it as a down payment on their next home, Kootchick suggests. This may enable them to consider properties they thought were out of their budget.

    In a tight market, focusing on homes that need minor cosmetic upgrades can be a good strategy, according to Scott Waters, a realtor. These homes are often priced lower and have less competition, allowing buyers to build instant equity without significant renovations.

    If you're planning to sell and relocate, check if your company offers relocation assistance programs, which can help with selling your current home and provide financial incentives or purchase assistance in your new area.

    Distressed properties and foreclosures are also an untapped opportunity in a low-inventory market. These homes typically require more work but can be purchased at significantly lower prices, making them an option for buyers who might otherwise be priced out of their desired neighborhoods.