One of America's key figures in commerce and finance has predicted a significant change in the housing market soon. Barbara Corcoran, the founder of The Corcoran Group, shared her insights during an interview. She highlighted the impact of interest rate fluctuations on the housing market.
Corcoran believes a decrease in interest rates could spark a buying frenzy. "If rates go down, just another percentage point, that's what I'm hoping for, prices are going to go through the roof," she said. According to her, a drop in interest rates will attract many sidelined buyers into the market.
Currently, the interest rate for a 30-year fixed mortgage is at 7%, and a 15-year fixed mortgage is at 6.125%. These rates have remained stable recently. The Federal Reserve has kept interest rates unchanged, with the federal funds rate at a 22-year high. This decision affects mortgages, loans, and credit card rates.
Corcoran warns against waiting for rates to drop further, fearing prices will only go higher. "If you wait for interest rates to come down by another point, I don't think you'll gain. I think you'll wind up paying more," she cautioned. She predicts real estate prices could rise by 8 to 10% if interest rates decrease.
She mentioned a "magic number" that entices buyers into the market. Despite the possibility of reduced selling costs, Corcoran doesn't see home prices dropping. She argues sellers aim to maximize their profit, not pass savings to buyers.
Corcoran also touched on the continuous rise in housing prices, driven by a persistent shortage. Despite a 6% increase in housing prices this year, the demand remains high due to the limited supply. She believes that increasing the supply is crucial to stabilizing the market.
Macro-economic uncertainties and market stalls contribute to the housing dilemma. "Whenever there's uncertainty, people stall. And whenever people stall, it stalls the marketplace," Corcoran observed. Yet, she remains optimistic that the housing market's momentum will continue due to the ongoing shortage of homes.
