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Barbara Corcoran, the well-known real estate mogul and star of Shark Tank, believes the housing market is primed for a significant surge if mortgage rates fall to a specific number: below 6%. A dip into the 5% range, she says, could cause the market to “go ballistic.”
During an appearance on Fox Business’ Cavuto: Coast to Coast, Corcoran shared her thoughts on the market’s current state and what could ignite a wave of homebuying. She emphasized that while mortgage rates have been bouncing between 6% and 7% for months, buyers are no longer waiting for a miracle drop.
“Rates have been bouncing around for a while now … so people are confused, they don’t have big expectations, they’re no longer waiting for a tremendous rate drop,” she explained. “But if that happens, God, it would be incredible for the market.”
Corcoran pointed out that any rate in the 5% range would be enough to shake things up. “Anything with the 5% in front of it is going to make this market go ballistic,” she said.
A Desperate Need for First-Time Buyers
One of the more concerning trends, Corcoran noted, is the lack of first-time buyers entering the market. She highlighted the importance of these buyers and revealed a surprising statistic: “Less than 24% of the people are first-time buyers, an all-time low.”
First-time buyers are critical to the health of the real estate market because they keep demand steady and ensure properties keep moving. Without them, the cycle slows, making it harder for others to sell and upgrade their homes.
“What we’re losing right now and what we desperately need right now is more first-time homebuyers,” she emphasized.
Existing-Home Sales Show Promise
Despite this lack of first-time buyers, there’s a glimmer of hope. Corcoran pointed out that existing-home sales have recently increased by 3.4%. This marks the first year-over-year growth in home sales in nearly three years, a trend that could signal a rebound.
“There were 25% more choices for the buyer coming out and looking,” she said, noting that increased inventory has given buyers more options. “On top of that, buyers themselves have gotten accustomed to the rates being what they are, and they got tired of waiting.”
However, she acknowledged that first-time buyers weren’t a big part of this recent uptick, further underscoring the need to get new buyers into the market.
A Sharp Rate Drop Could Shake Up the Market
Realtor.com® Chief Economist Danielle Hale echoed Corcoran’s outlook. She agreed that a significant drop in mortgage rates would have a major impact, particularly for buyers who are waiting on the sidelines. “Every drop in mortgage rates is going to make a difference for some home shoppers who are on the margin,” Hale said.
She predicted that a gradual decline in rates, which is more likely, would steadily build momentum in the housing market. However, a sudden drop to 5% could trigger a wave of both buyers and sellers, dramatically accelerating activity.
“If we were to see a sharp drop in mortgage rates to 5%, that could bring in a lot of buyers and sellers at once—and really jolt the housing market,” Hale said. “It’s going to be not only about the rate itself, but how we get there.”
Could Rates Climb Again?
While the possibility of rates increasing can’t be ruled out, Corcoran doesn’t see them climbing above 7% again. “I don’t think people are thinking it’s going to go much up,” she stated. “That could happen, but I don’t think you’re going to see interest rates above 7% again. I’m hoping it’s going to go and hover around 6% or even go lower.”
Hale added that a rate hike would have the opposite effect, slowing not just home sales but the entire economy. “It could slow down the whole market, it would slow down the whole economy, it would slow down all the support services for the housing market—it would be a terrible thing,” she warned.
The Outlook
For now, buyers appear to have adjusted to the “new normal” of mortgage rates in the 6% to 7% range. Yet, as Corcoran and other experts suggest, a drop into the 5% range could be the trigger that brings back excitement, energy, and, most importantly, more first-time buyers.
If that happens, Corcoran believes, the housing market won’t just improve—it will “go ballistic.”
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