- Buying a home won't get cheaper from here, Kevin O'Leary said.
- The "Shark Tank" investor predicted high mortgage rates were here to stay.
- Pandemic migration trends also aren't reversing, which has kept home prices elevated.
The housing market probably isn't ever going to get any cheaper, according to "Shark Tank" star Kevin O'Leary.
Speaking to Fox Business on Sunday, the investor pointed to the rapid run-up in interest rates, which has been the main culprit behind higher housing costs, and that's not going to change.
Central bankers kicked off the most aggressive monetary policy tightening campaign ever in 2022 in order to tame inflation. Prices have come down significantly from their highs, but central bankers look poised to keep rates higher for longer, as they're still keeping an eye on inflationary pressures in the economy.
"Only 12 months ago, we were thinking seven rate cuts, of which none have appeared because inflation remains rampant," O'Leary said, noting that consumer prices remain well above the Fed's 2% target. "I'm not sure that's going to change at all."
That's bad news for home buyers, given that interest rates influence mortgage rates and home prices. The 30-year fixed mortgage rate stuck close to 7% last week, according to Freddie Mac data. Meanwhile, the median sales price for a US home rose to a record-high of $407,600 in April, according to the National Association of Realtors.
Meanwhile, pandemic migration trends look like they're here to stay, O'Leary said, which has also pushed up housing prices. Work-from-home trends have fueled more interest in suburban areas and areas away from the biggest metros, which isn't likely to reverse, he predicted.
"The prices of those houses in rural regions went way through the roof," O'Leary said. "It's a new America. It's a digitized America, and housing is more expensive."
Other real estate experts have warned affordability conditions aren't improving anytime soon. Zillow economists expect home prices and mortgage rates to stay mostly level this year, which could bring another tough year for home sales.