If you're thinking about buying a home, there's no time like the present to take action, says real estate mogul Barbara Corcoran.
The benchmark 30-year fixed mortgage rate fell slightly last week to 6.79%, well below October's high of 7.79%, Freddie Mac said. For homebuyers, the prospect of waiting for borrowing costs to fall may seem very attractive.
But Corcoran, the Shark Tank star and founder of the Corcoran Group, begs to differ.
In a conversation on Yahoo Finance Live (video above), Corcoran said lower interest rates will bring more buyers into the market, increasing competition and potentially pushing already high prices “through the roof.” I warned you that it's sexual.
“If interest rates fall further by the end of the year, everyone and their mothers and in-laws will be looking for new homes. There will be more competition and home prices will have to go up,” Corcoran said.
Home prices rose at a record pace in January as more buyers came off the sidelines. This fierce competition often leads to bidding wars and even higher prices.
In the first month of this year, the typical seller received 2.7 offers and 16% of homes sold for more than the asking price, according to data from the National Association of Realtors (NAR).
A key factor in all of this is tight inventory. Existing home sales in 2023 hit the lowest level since 2005 as prospective sellers held on to low mortgage rates.
“There's such a shortage of housing right now that even though everyone is singing the blues, prices are going up,” Corcoran said. “This happened simply because there were a lot of buyers and there weren't enough homes available.”
Supply is gradually improving. According to Redfin, the number of new listings rose 3.8% in February, the highest level in 17 months, and the total supply of homes for sale was at its highest level in a year.
Lawrence Yun, NAR's chief economist, said this is a sign that buyers and sellers are becoming more comfortable with rising mortgage rates.
“More and more people are adapting to the new normal of mortgage rates. Interest rates are likely to be between 6% and 7%,” Yun said on Yahoo Finance Live. “There is a significant group of sellers who continue to hold off and they will start listing properties.”
While the increase in new listings is good news for buyers, it may take time for inventory to improve dramatically. Top economist Mark Zandi warned that it would take “several years” for a market recovery to materialize.
“I can say with great confidence that the housing market has probably bottomed out in terms of home sales and demand,” Zandi said. “Everything shows that [the 30-year mortgage rate] It would probably be 6% instead of 8%, and if so, we would see an improvement, but it's a process. ”
So what should you do if you're sitting on the sidelines hoping mortgage rates will go down or more homes will come on the market? Corcoran's advice is simple. “There's no need to wait.” She says now is always the best time to buy and recommends “writing a love letter” to the homeowner you're eyeing to get an edge in a tight market.
“Join the community and see which homes you like and leave a love note on every door,” Corcoran says, focusing on what you like about the home, even if it’s not for sale. Suggested creating a personal message.
“It worked out well. The last four houses I bought weren't for sale. I just picked the one I liked best, and people ended up calling.” [back],” she said.
sheena smith Anchor of Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Have a tip about a deal, merger, activist situation, or more? Email seanasmith@yahooinc.com.
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