Housing interest rates hit 7 percent, as brokers predict prices to dip slightly on homes.

SALISBURY, Md- Housing prices and cheap debt were a staple of the pandemic until the Federal Reserve started raising interest rates on borrowing earlier this year, bumping interest up to 7 percent as of the latest increase.

“The buying power has been reduced with the higher interest rate so we are seeing demand dip slightly,” said realtor Shawn Hunt of CMG Home Loans.

Hunt tells 47ABC, at 7 percent interest, homes that were affordable for some at the beginning of the year, are now out of reach often by hundreds of thousands of dollars.

“Someone who qualified for 300k now only qualifies for 200k so they lost 50-100 thousand in buying power,” he said.

Home-buying companies like Delmarva Dave are feeling that difference, as more customers turn to them, as competing offers for homes begin to drop, due to less being able to afford those higher priced homes.

“Six months ago you could put your house on the market and have 10 offers in a matter of days, now they are sitting longer and prices are flattening and dropping,” said Owner Dave Schmidt.

Schmidt tells 47ABC, he believes the lack of attention on more premium homes doesn’t mean a lack of demand, rather the demand has shifted to lower-priced homes, further straining the availability of affordable housing on Delmarva. He says despite that increase in demand, so far he has not seen the price on those homes begin to climb.

“This market is pushing up demand for houses we need the most and the demand for higher-end housing is slacking off,” he said adding “for houses $100k to $300k range you see prices not rising but you are seeing more demand,” he said.

Hunt tells us he expects rates to fall next year and that the market is not as bad as some analysts predicted, or buyers wanting cheaper listing prices may have hoped.

“Things are sitting on the market longer but that is more realistic of a normal year if you take the last two years out of houses are supposed to sit 30-45 days,” he said.

He tells us he expects demand and prices to pick back up if the fed decreases rates after this winter.

“The forecast for next year is that rates will come back down into the 5s or 4s which will bring back that heavy demand of buyers,” Hunt said.