Rising mortgage rates making dramatic impact on Sacramento real estate market
SACRAMENTO — Homebuyers are continuing to struggle with rising mortgage costs as interest rates are now the highest they've been in more than 20 years.
Rising mortgage interest rates are having a dramatic impact on the Sacramento region's real estate market.
"Buyers have much less purchasing power than they had in the last few years," said Suneet Agarwal, a realtor and the CEO of Best Sac Homes Group.
"About 7,000 fewer new listings between January to July this year compared to last year," said Ryan Lundquist, a Sacramento real estate analyst.
Last week, the interest for a 30-year mortgage rose above 7.3%. Rates have not been this high since the year 2001, back when the cost of a home in sacramento was a lot lower.
"The median price was just under $200,000 and that's even hard to comprehend since now it's about $590,000," Lundquist said.
The continuing rise is surprising many real estate professionals.
"I think that almost everyone got their rate predictions wrong this year," Lundquist said.
"It's just a challenge for everybody," Agarwal said.
Agents and mortgage brokers are often now having to break the bad news to clients looking to buy.
"We do have to have those hard conversations, and there's sometimes when the rates do fluctuate enough that those people who are on the verge, they may be priced out until the rates come back down," Agarwal said.
Rising rates also means seeing fewer for sale signs around town and fewer open houses because homeowners are no longer motivated to sell.
"They're staying put because they have a low payment, but they're also staying put because they're eyeing what it would take to purchase a replacement home," Lundquist said.
So what's the best advice for people looking for a new home?
"Don't put yourself in a position where you're vastly overpaying," Lundquist said. "Be realistic about what it takes today and make a realistic offer and something you feel comfortable with. I think that's the key."
Real estate experts say about 40% of home sellers are also making concessions on the price for repairs, rate buydowns, and closing costs.
