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High prices, steep mortgage rates, and fierce competition are locking young people out of becoming homeowners, Barbara Corcoran says.
The "Shark Tank" investor and real-estate tycoon pointed to "disturbing" data from the 2024 NAR Profile of Home Buyers and Sellers during a recent interview on "Cavuto: Coast to Coast" on the Fox Business Network.
The founder of The Corcoran Group said the share of first-time buyers dropped from 32% last year to a record low of 24%. The percentage of cash buyers — who tend to be investors or second-home buyers — hit a record high of 26%. Plus, the median age of first-time buyers climbed from 35 to 38.
The report suggests that first-time buyers are increasingly being outbid by investors or people buying second or third homes who are paying in cash, and many are having to wait until they're nearly 40 to become homeowners.
The median sale price for existing homes rose 4% to $407,200 in October, marking the 16th straight month of year-over-year price gains, per the National Association of Realtors. Sales did rise 2.9% from a year earlier, the first year-over-year increase since the summer of 2021.
Corcoran said transactions had picked up because buyers were used to higher rates and "got tired of waiting" for them to dip. Yet she emphasized that a significant fall in rates would be "incredible" for home sales.
"Anything with a 5% in front of it is going to make this market go ballistic," she said.
Bankrate data shows the average 30-year mortgage rate soared from 3.2% at the end of 2021 to a two-decade high of 7.9% in October last year, but has since dropped to 6.9%.
President-elect Trump's plans to cut taxes and impose tariffs have stoked fears that price growth could accelerate, pushing rates higher. "Inflation is on everyone's mind and I think it's risky," Corcoran said.
She predicted mortgage rates would hover around 6% or go lower. Any rise "would slow down the 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."
Corcoran also dismissed concerns that the housing market is overheated and headed for a slump. She cited the low percentage of home purchases made as investments, saying a surfeit of investors "creates a bubble big time."
"This is nothing like the last bubble," she said. "I don't see a bubble at all."
