Home sellers fret as mortgage rates rise

In California, some industry observers are projecting a gradual slowdown in prices as borrowing costs rise and affordability becomes an even more acute issue.

“The picture for California has been great, but I think it has started changing,” said Bruce Norris, president of The Norris Group, a real estate investment company. “There's certainly going to be upcoming weakness in California because we've just about gotten to the point where we've priced our typical buyer out of his ability to make the monthly payment.”

High-end homes in parts of Chicago, those priced at $1 million and up, aren't selling as fast as they did in recent months, said Barbara Frankel-Abrams, vice president of sales at Jameson Realty Group.

“Maybe carrying a quarter percent increase (in interest) is more formidable at that price,” she said.

Sin City's housing market has been hot during the period of low interest rates over the last several years. But some mortgage agents in Las Vegas believe that rising rates could start to put the brakes on their housing boom, making it more difficult for sellers.

“People have decided they're not going to pay the astronomical prices for homes,” said Las Vegas mortgage agent Connie Hooten.

Not everyone is predicting that ballooning home sale prices will burst with rising interest rates.

In Phoenix, the market has been so hot, it's going to take a while for it to cool down, said Jay Butler, director of the Arizona Real Estate Center at Arizona State University. And in the Boston area, Maggie Tomkiewicz, president of the Massachusetts Association of Realtors, said that if anything, rising rates may lead to increased home sales in the short-term, as buyers anticipating further rate hikes try to jump in the market while rates are still reasonable.

“Buyers say, ‘Let's get out there in the market and get it done,’ ” she said.

That sentiment has been lost on Sherry Hersh and her husband, who works at a local Home Depot Store designing kitchens and bathrooms. They have already lowered the price of their Marietta, Ga., home by $30,000 and still haven't gotten a good offer despite the home being appraised at $365,000.

The average sales price for a single-family detached home in metro Atlanta fell to $234,876 in January from $238,369 in December, while the average number of days a home stayed on the market before selling increased from 81 to 84 days over that period.

“We've had some offers, but they've been very, very low and by builders who want to basically knock our house down and build a $500,000 home on our property,” Sherry Hersh said.

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