Mortgage Rates at 7% Forcing Home Sellers to Slash Prices

Mortgage rates crossing the 7% mark are making homebuying far too pricey for everyday buyers, forcing sellers across the nation to drop their asking prices. Because borrowing costs have shot up so high, potential buyers are backing off or waiting on the sidelines, causing listings to sit on the market for an average of 50 days while inventory rises. To actually get a deal done, sellers are having to make multiple price cuts or pay for extra closing costs to help buyers out. While former boomtowns like Denver or Austin are feeling a huge slowdown, wealthy suburbs and high-demand places like Silicon Valley are still holding up a bit better because there are so few homes for sale and plenty of buyers paying in cash.

Susan Wachter, Co-Director of the Penn Institute for Urban Research (Penn IUR) and real estate professor at the Wharton School, plain-spokenly sums up the situation by saying that "housing is roadkill here." She stresses that these aggressive rate hikes are completely slamming normal buying and selling activity, pricing regular families out of the market entirely. Because people simply can't afford the huge monthly payments at 7%, Wachter points out that sellers are getting backed into a corner and have no choice but to take big pay cuts on their homes if they want to move them.