(NewsNation) — Elevated mortgage rates and record-high home prices are keeping potential buyers on the sidelines, and businessman Kevin O’Leary doesn’t see that changing anytime soon.
The “Shark Tank” star thinks mortgage rates would have to fall to 5.5% to unfreeze the housing market — well below today’s 6.6% rate and a level not seen since Aug. 2022.
“That’s the magic number that gets everybody off their heinies to start looking for housing,” O’Leary told NewsNation’s Nichole Berlie on Wednesday.
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But 5.5% is more of a dream than a realistic possibility, and the Canadian businessman considers it unlikely given the Federal Reserve’s recent posture.
“You would need the Fed to drop interest rates almost 200 basis points for that to happen, and I think the chance of that is zero,” O’Leary said.
Instead, he predicts buyers of starter homes will have to settle for less square footage to stay within budget.
Homes are selling at the slowest summer pace in a decade: Redfin
O’Leary’s comments come as housing data continues to show a sluggish market. Earlier this week, Redfin reported that homes are selling at the slowest summer pace in a decade.
The typical home that went under contract in July spent 43 days on the market — the longest span for any July since 2015, Redfin said.
In Florida, homes are taking much longer to sell, over 90 days in West Palm Beach and Fort Lauderdale.
A rate cut from the Federal Reserve could bring mortgage rates down, but so far, policymakers have been reluctant to act until the effects of President Donald Trump’s tariffs are clearer.
For now, Fed officials remain more worried about inflation than potential job losses, which means it could be some time before homebuyers see major relief.
Watch the full conversation with “Shark Tank’s” Kevin O’Leary in the player above.
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