With mortgage rates on the decline, many potential homebuyers may be holding out for even lower borrowing costs in hopes of a more affordable market. However, according to real estate mogul Barbara Corcoran, this strategy may not yield the desired results. In a recent interview with Bloomberg TV, the „Shark Tank“ star warned that waiting for rates to drop further could actually lead to increased competition and higher prices in the housing market.
Corcoran advised prospective buyers to take advantage of the current market conditions and enter the market now, rather than waiting for rates to decrease. She explained that a mere one-point drop in mortgage rates could trigger a surge in demand, driving up prices and making homes less affordable for those who delayed their purchase.
Recent data from Freddie Mac revealed that the 30-year mortgage rate had fallen to 6.47%, its lowest level since May 2023. Despite this drop, rates have remained relatively high in recent years due to tighter monetary policies, deterring both buyers and homeowners from participating in the market.
In addition to high mortgage rates, the housing market has also been impacted by a shortage of both existing and new housing supply. This scarcity has fueled rapid price appreciation, with the median single-family home and condo price reaching a new high of $360,000 in the second quarter, according to data from ATTOM.
The rising costs of homeownership are further exacerbated by mortgage payments, insurance, and property taxes, which have collectively pushed housing costs to a record $2,114. Given these challenges, it may be tempting to wait for mortgage rates to drop before making a purchase. However, Corcoran cautioned against this approach, noting that every homebuyer is likely thinking the same thing.
Corcoran previously predicted that home prices could increase by as much as 8%-10% once mortgage rates hit 6%. With this in mind, she urged buyers to act now and secure a property, especially if they are already paying rent, as waiting could result in higher costs in the long run.
Echoing Corcoran’s sentiments, Bank of America advised against trying to time the market and emphasized that high mortgage rates can always be refinanced once they decrease. Ultimately, the key takeaway is that potential homebuyers should carefully consider their options and weigh the benefits of entering the market sooner rather than later.