Housing Market Will Go ‘Ballistic’ With One Change: ‘Shark Tank’ Investor

Shark Tank investor and real estate mogul Barbara Corcoran recently said the housing market will go “ballistic” if interest rates reach 5 percent levels again.

Americans have been facing a difficult housing market for years, with home prices continuing to surge and interest rates just now reaching 6 percent levels, with many having been priced out of the American dream of home ownership.

“The buyers themselves have gotten accustomed to the rates being what they are, and they just got tired of waiting. But I am wondering if we’ll ever see a 5 percent number because anything with the 5 percent in front of it is going to make this market go ballistic,” Corcoran said in an interview on Fox Business’ Cavuto: Coast to Coast.

Looking ahead, Realtor.com senior economist Joel Berner said high 5 percent interest rates aren’t totally out of the realm of possibility.

“Our forecast for 2025 is more in the low-6 percent range, but if some of the inflationary fears coming out of the new Republican administration’s agenda turn out to be less significant than we think, mortgage rates could feasibly dip below 6 percent,” he told Newsweek. “We agree that this would be a major boost to the housing market.”

Currently, less than 25 percent of homes in America are sold to first-time buyers, highlighting the affordability gap.

The average sale price for a home in America for the third quarter of 2024 was $501,000, according to the St. Louis Federal Reserve. And in certain markets like Los Angeles and New York City, even the most affordable homes for a single-family reach into the millions.

“The rates have been bouncing around a while now between 6 and 7 percent, so people are confused,” Corcoran said on Cavuto: Coast to Coast. “They don’t have big expectations. They’re no longer waiting for a tremendous rate drop. If that happens, God, it would be great for the market, but in the last year alone we’ve sold 3.5 percent more houses despite what’s going on with the interest rates.”

Interest rates are a major driver of home purchases, with half of Americans saying lower mortgage rates at 4 percent or below would make them realistically consider purchasing a home, according to a recent CNET survey.

“Corcoran is right in that the current problem with the housing market is two-fold. Many first-time homebuyers feel locked out of the market due to high interest rates that have increased monthly payments on many properties to be more than the rent they’re currently paying,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “A move in rates to below six percent would more than likely create a flurry of activity among that group who now could manage those mortgages more efficiently.”

According to a recent report from the National Association of Realtors, the average homeowner is still far older than in decades past, with an average age of 56.

If mortgage interest rates reach 7 percent again, Corcoran said the housing market would inevitably be hit with a slowdown.

“It would slow down the whole market, would slow down the whole economy,” she said. “It would slow down all the support services for the housing market. It would be a terrible thing.”