Shark Tank's Kevin O'Leary gives stark warning about housing market in these three states

Homeowners successful Texas, Florida, and Tennessee have go reluctant to merchantability their properties due to the fact that they're presently enjoying debased owe rates and a determination to different authorities would much than apt treble their rates. 

Over the past 2 years, the U.S. Federal Reserve's hiked involvement rates successful an effort to curb inflation. 

In the process, owe rates person been pushed to their highest levels successful 4 decades.

It means determination person been higher lodging costs for buyers portion location prices proceed to rise. 

Homeowners that were locked successful to little owe rates are fundamentally deterred from selling and facing caller loans astatine much than 7 percent interest, investor and Shark Tank property Kevin O'Leary said.

'That was unprecedented successful presumption of the pace,' O'Leary said to Newsweek.

O'Leary noted that astir 90 percent of homes person mortgages with rates beneath 6 percent.

'If those radical were to merchantability their homes now, they would beryllium present facing a 7½ percent owe versus 3½ percent. They person nary inducement to merchantability their homes,' O'Leary explained. 

'So you've got an artificially debased fig of existing lodging units not coming connected the market. That's peculiarly evident successful Florida, Texas, Tennessee and different markets.' 

Wealthy retirees are moving from high-tax states specified arsenic California, Massachusetts, New Jersey, and New York to places with little taxes and surviving costs specified arsenic Miami, Florida, and Austin, Texas, increasing request and driving up prices successful these markets. 

The displacement towards distant work, accelerated by the pandemic, has besides accrued request successful the South and Sun Belt regions, arsenic radical question amended surviving standards distant from municipality centers. 

'If you were looking astatine a representation of...where lodging is peculiarly strong, it coincides oregon correlates with much charismatic taxation policy,' O'Leary said.

'If you tin determination a 100 miles retired of the metropolis oregon 200 miles distant from wherever you work, you unrecorded successful a amended determination for galore reasons—better housing, amended schools, a amended lifestyle.' O'Leary went on. 

'So those smaller towns and those jurisdictions which weren't acceptable for a roar successful lodging find themselves successful precisely that immense demand. And this is the quality of a integer economy.'

O'Leary said helium was amazed that precocious owe rates haven't dampened lodging demand, attributing it partially to humanities norms wherever rates were successful the 6 to 7 percent range. 

He emphasized that the accelerated gait of the Fed's complaint hikes was unprecedented and unexpected but was besides amazed that it did not dent the request for housing.

'I don't deliberation anybody saw that coming,' helium said. 'It doubled oregon tripled the outgo of owe and had nary effect connected demand.'

One mode of explaining that dynamic was that historically rates had been successful the 6 percent and 7 percent range.

'Many lodging marketplace booms person occurred during periods wherever rates were higher than that,' O'Leary said. 'But to person the Fed rise rates successful an unprecedented velocity arsenic we saw, that was truly unique.

'The bulk of lodging is extraordinarily buoyant done an unprecedented play of complaint hikes, and truthful for those of america who analyse this each time arsenic we effort and deploy capital, that was a surprise.'