A growing number of home sellers have been forced to readjust their home prices in recent weeks. According to Redfin, an estimated 6.1% of homes for sale during the four weeks leading to June 19, asked for a price drop – a record high as far back as the data goes, through the start of 2015.
That comes as mortgage rates hit 5.70% last week and are nearly 2.5 percentage points higher than the beginning of 2022, relegating some buyers to the sidelines with busted budgets.
“If you overprice your home in any market, you’re going to feel resistance,” Lizy Hoeffer, owner and mortgage broker at Cross Country Mortgage LLC, said. “In the last three years, sellers have been able to get basically whatever they want for their house. We’re just not in a market like that right now.”
‘Buyer budgets don’t stretch as far as they used to’
The dream of homeownership is slipping out of grasp for many would-be buyers as costs rise.
“Homeowners thinking about moving should know that while recent sellers have enjoyed favorable housing conditions that included high prices and fast sales, the tide is shifting,” Realtor.com Chief Economist Danielle Hale, told Yahoo Money. “Higher rates and home prices mean that homebuyer budgets don’t stretch as far as they used to.”
According to Realtor.com, rising mortgage rates have increased the monthly mortgage payment on a median-priced home an estimated 60% more than last year. The median monthly mortgage payment has jumped by $513 from the start of the year through May, according to a recent report from MBA.
For instance, in the most populated county of Washington State, King County, the average price is over $1 million, according to Adriana Perezchica, real estate broker and owner of Via Real Estate Group. Despite the challenges, Latinos there – which comprise a large portion of her clientele – are buying in the outskirts for an average of $550,000.