Planning To Buy A House? Shark Tank's Barbara Corcoran's Advice Is To Get Out There Now

With a net worth of around $100 million, entrepreneur and investor Barbara Corcoran is known for her bold stance on the U.S. housing market. Corcoran, who rose to fame after starring in Shark Tank, has built one of the largest realty brokerages in New York City. 

Corcoran has been encouraging investors to get into real estate, regardless of interest rates. While many have been waiting for rates to ease their mortgage burden, the real estate mogul believes that a rate cut will drive more buyers into the market, boosting home prices significantly.

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"If you would take my advice, I would say get out there because what you have right now, which you won’t have if rates come down another point, they just came down. But you need one more point to bring everybody out into the market. And what’s going to happen is you’re going to pay more for the house," Corcoran said during an interview with Bloomberg Television. 

Rate Cuts Ahead

The Federal Reserve slashed rates by 50 basis points in September, marking the first half-point rate cut since 2008. 

"The Committee has gained greater confidence that inflation is moving sustainably toward 2% and judges that the risks to achieving its employment and inflation goals are roughly in balance," the Federal Open Market Committee (FOMC) said in a statement. 

Given the easing inflation and market conditions, investors are predicting another 25 basis point rate cut this month. The CME FedWatch Tool predicts a 94.1% chance of a quarter-point rate cut at the FOMC's next meeting. 

What Does This Mean For Home Prices?

Despite the lower benchmark interest rates, mortgage rates have remained high. The median rate on 30-year fixed mortgages stood at 6.52% for the week ended Oct. 13, up 16 basis points week over week. 

However, mortgage rates are expected to decrease in the coming months if the Fed continues reducing the federal funds rate.

The Mortgage Bankers' Association (MBA) predicts that mortgage rates will fall to 6.2% in the fourth quarter of 2024 and 5.8% by 2025. 

While the rate cut will likely lower mortgage interest rates, Corcoran believes home prices will rise sharply as more buyers enter the market. 

"You know, interest rates go down, prices go up," Corcoran said, "How much pent-up demand do you think is on the other side of lower mortgage rates from here? Tremendous demand because so many people are thinking exactly as you are."

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Corcoran's Advice: Get Out There Now 

According to Corcoran, prospective first-time homebuyers are missing out on the American dream while they are still renting and waiting for rates to go down. Rental rates have jumped by over 30% since the pandemic, bridging the gap between rents and mortgage rates. 

The difference between average monthly mortgage payments and rent is less than $500 in major metropolitan cities across the U.S. While saving $500 a month may seem appealing, renters are giving up on building equity. 

"So what have you really gained by paying the landlord over these years and taking the increases in rent? Not much because prices have gone up," Corcoran added. 

Median home prices in the U.S. have risen by 3.9% year-over-year in September. As the Fed gears up to reduce rates, the average home price in America will skyrocket further. Corcoran believes the starter homes market is the "hardest hit, where the greatest bidding is going on." 

Thus, despite the high mortgage rates, Corcoran advises first-time homebuyers to purchase a home now. 

You Can Profit From Real Estate Without Being A Landlord

Real estate is a great way to diversify your portfolio and earn high returns, but it can also be a big hassle. Luckily, there are other ways to tap into the power of real estate without owning property.

The Arrived Homes investment platform has created an Income Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

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