Shark Tank star Barbara Corcoran explained this week what will need to happen to drive housing prices “through the roof.”
Corcoran, a self-made real estate millionaire, appeared on Fox Business Network and said a drop in interest rates would be the driving factor that will attract more buyers and drive up prices — according to Corcoran, the “magic number” is a 1 percent drop in mortgage rates.
The average 30-year fixed rate mortgage is 6.87 percent, according to the latest data from government-backed lender Freddie Mac, which means rates under 6 percent will need to happen.
“If rates go down, just another percentage point, prices are going to go through the roof,” Corcoran said. “Everyone will come out and buy. There are probably 10 buyers on the sidelines [for each home on the market] waiting for interest rates to come down. So everybody’s going to charge the market.”
Here’s more from the Daily Mail on what needs to happen to prompt a fall in mortgage rates:
While the Federal Reserve does not directly set mortgage rates, the benchmark borrowing rate it sets does indirectly influence the amount Americans pay on a loan to purchase a home.
Mortgage rates track the pattern of 10-year Treasury Yields, which are determined by a range of factors including inflation, economic growth and the Fed’s benchmark funds rate.
The Federal Reserve left interest rates unchanged for the fifth consecutive meeting earlier this month, keeping benchmark borrowing costs at a 23-year high between 5.25 and 5.5 percent.
The Fed’s series of aggressive rate hikes were intended to pour cold water on rampant inflation, which peaked at 9.1 percent in June 2022.
It’s not clear precisely when the Federal Reserve will start decreasing rates but it’s expected by the end of the year.
But Corcoran warned Americans that as rates fall, housing prices will increase.
“If you wait for interest rates to come down by another point, I don’t think you’ll gain,” she said. “I think you’ll wind up paying more because I wouldn’t be surprised if real estate went up by another 8 or 10 percent if interest rates come down another point.”
As seen in the chart below, when rates drop below 5 percent, a full 72 percent of potential home buyers say they are willing to make a purchase.
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Tom Tillison grew up in Maryland before moving to Central Florida as a young teen. It is in the Sunshine State that he honed both his passion for politics and his writing skills. Tillison also contributes to BizPac Review.
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