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Since the advent of the thirty-year mortgage, purchasing real estate has been one of the most reliable routes Americans could take to the middle class. Several generations of Americans have used the equity in their homes to finance businesses, their children’s education and their retirement. That’s why Shark Tank star and real estate mogul Barbara Corcoran is concerned that less than 25% of homes in America are sold to first-time buyers.
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Corcoran raised her concerns during an appearance on Fox’s Cavuto: Coast to Coast, where she spoke about the difficulties potential homeowners face today. Most of these issues are related to cost. According to the St. Louis Federal Reserve, the average sales price for a home in the US for the third quarter of 2024 is $501,000. That’s expensive. However, $1,000,000 starter homes are common in major coastal real estate markets such as Los Angeles, Seattle, and New York City.
As high as that number is, Corcoran sees current interest rates as an even bigger barrier to buying a home. When host Neil Cavuto asked Corcoran to share her thoughts on the “interest rate environment,” Corcoran responded by saying, “Well, I think what we’re losing now, (what) we urgently need, is more first-time buyers in the market, less Then 24% of people buying now are first-time buyers, which is an all-time low.”
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She then addressed the interest rate question by telling Cavuto, “Interest rates have been hovering between six and seven percent for a while now, so people are confused. They don’t have big expectations. They are no longer waiting for huge interest rates. If that happens, God, that would be great for the market, but in the last year alone we’ve sold 3.5% more homes despite what’s going on with interest rates.”
However, Corcoran noticed an ominous trend lurking beneath that rosy benchmark when she told Cavuto, “But the new buyers aren’t really part of that. [increase in sales volume].” A recent report from the National Association of Realtors shows that the average American homebuyer is now 56 years old. That means today’s homebuyers are operating in a much less buyer-friendly market than their parents or grandparents.
A recent survey from Clever Real Estate found that half of American homeowners over the age of 56 plan to grow older and never sell their property., further clouding the picture for young buyers. Corcoran attributed the recent uptick in purchasing activity to increased available inventory and the fact that buyers have largely become accustomed to the new interest rates.
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Despite this, Corcoran thinks there could be a groundswell of activity in the real estate market if interest rates fall further. She said: “I wonder if we’ll ever see a 5% figure again because anything with the 5% before it will make this market go ballistic.” On the other side of the equation, Corcoran believes a return to 7% would have almost the opposite effect.
She told Cavuto: “It (7% interest rate) would 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 terrible.” She added that she doesn’t think interest rates will get that high and “hopes interest rates will hover around 6% or lower.”
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This article Barbara Corcoran reveals alarming statistics about the housing market: less than 25% of all homes sold go to first-time buyers. Originally appeared on Benzinga.com
