Shark Tank's Barbara Corcoran on housing market: ‘The worst is behind us’
Real estate may be seeing signs of life. Still, the market will only take off if interest rates drop, Barbara Corcoran, founder of Corcoran Group and Shark Tank investor, said on Yahoo Finance Live (video above.)
"The worst is behind us," she said.
"It's going to have to drop two points and people are going to act like there's a sale on," Corcoran said on a full market recovery. "Anybody who even has a first thought of buying a house is going to rush the market."
"The big problem still is high interest rates and there's still a lack of inventory," Corcoran added.
Last week the mortgage rate jumped again, to 6.32% from 6.12% a week prior. Although the rate is down from November, when borrowing costs reached 7%, their level continues to keep many buyers on the sidelines.
"I think the price now is [mid-$300,000], which is only 2% up from a year ago. But to pay for that house with the higher interest rates, the homebuyer has to pay [around] another $600 a month,” said Corcoran on average home costs.
The latest Redfin data shows that the average medium home price in the U.S. was around $388,211 in Q4 2022, a 1.3% increase from $383,185 in Q4 2021.
The minimal growth reflects a significant slowdown from the last three years. Annual price growth was 14.8% in 2021, 12.7% in 2020, and 6.5% in 2019.
On the other hand, a homebuyer who purchased an average-priced home today would need to pay $1,926 monthly on a mortgage (with a 20% down payment), which is $620 more a month than a buyer who bought an average-priced home in Q4 2021 at an interest rate that was then around 3.11%.
New York to Florida
Even in the broader housing cooldown, there are a few states, such as Florida, Colorado, and Texas, that continue to remain more popular than others, according to Corcoran:
"We see an exodus of a lot of young people who are taking their wealth and bringing it down to Florida," said the founder and investor of her clients who left New York for Manhattan. "It's an exodus of wealth and taxes."
Florida topped the chart for net domestic migration in 2022, increasing its population by almost 2%. Based on data published by the National Association Realtors, about 318,855 Americans moved to the state, while 299,557 Americans left the state of New York in 2022.
A recent report showed that many millennials moved to Texas and Florida last year due to lower costs of living — a trend that landed Austin, Dallas, Jacksonville, and Tampa as four of the top ten millennial-moving-hotspots in 2022.
But with today's market uncertainty, even the expert said, "I don't know what's going to happen, but there's been a bellwether change."
Rebecca is a reporter for Yahoo Finance.
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