If you’re thinking of buying a home, there’s no day like today to make the move, says Barbara Corcoran.
The rate on the benchmark 30-year fixed mortgage declined slightly to 6.79% last week, well below October’s peak of 7.79%, according to Freddie Mac. For homebuyers, the prospect of waiting for lower borrowing cost might seem awfully enticing.
But Corcoran, Shark Tank star and founder of the Corcoran Group, begs to differ.
In a conversation on Yahoo Finance Live, Corcoran cautioned lower rates could bring more buyers into the market, boosting competition and sending already lofty prices “through the roof.”
“If interest rates come down another point by year end, everybody and their mother and their in-laws are going to look for a new house, and the competition’s gonna be so fierce that house prices will have to go up,” Corcoran said.
Home prices grew at a record pace in January, as more buyers came off the sidelines. And that fierce competition has led to an eruption of bidding wars, which often drives prices even higher.
National Association of Realtors (NAR) data shows that during the first month of the year, the typical seller received 2.7 offers, and 16% of homes sold over the asking price.
An important contributor to all of this is an inventory crunch. In 2023, existing home sales hit the lowest level since 2005, as would-be sellers who are locked into low mortgage rates stayed put.
“There is such a shortage of houses right now, so prices have gone up despite everybody singing the blues,” Corcoran said. “It happened simply because there are a lot of buyers and not enough houses available.”
Supply is slowly improving. New listings jumped 3.8% in February to the highest level in 17 months, while the total supply of homes for sale rose to the highest level in a year, according to Redfin.
It’s a sign buyers and sellers are getting more comfortable with higher mortgage rates, says Lawrence Yun, NAR’s chief economist.
“More people are adjusting to the new normal for mortgage rates, which appears to be between 6% and 7%,” Yun said on Yahoo Finance Live. “There is a sizable group of delayed sellers who have been postponing, and they will begin to list their property.”
While more new listings signals good news for buyers, a dramatic improvement in inventory may take some time. Top economist Mark Zandi warned the market’s recovery will take “several years” to materialize.
“We can say with strong conviction that the housing market in terms of home sales and demand has probably bottomed,” Zandi explained. “Everything indicates [the 30-year mortgage rate] will likely go to 6% rather than 8%, and if that’s the case, we should start to see improvement, but this is a process.”
So what should you do if you’re on the sidelines, hoping for mortgage rates to drop or more home to come on the market? Corcoran’s advice is simple: Don’t wait. She advises that “right now” is always the best time to buy, and to give yourself an edge in a tight market, “write a love letter” to the owners of the house you’re eyeing.
“Run into a community, see which houses you like and leave love notes on every door,” said Corcoran, who suggested crafting a personal message around what you like about the home, even if it’s not for sale.
“It works. The last four houses I bought were not on the market. I just picked out the house I like best and eventually the people called [back],” she said.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.
