If you’re thinking about buying a home right now, the current interest rates may have given you pause. The average rate on a 30-year fixed mortgage is 7.22% as of Nov. 30. That’s up more than a percentage point from this time last year.
Real estate mogul and “Shark Tank” star Barbara Corcoran recently shared her thoughts on the current housing market with “Good Morning America.”
Why Rates Are High
So many consumers have been wondering why mortgage rates are the highest they’ve been in over two decades.
“It’s the only tool the federal government has for controlling inflation and getting hold of our economy,” Corcoran said on the GMA segment. “They’ve wanted to slow it down and it’s worked,” she said. A year ago the inflation rate was 9%. Now the U.S. consumer price index is 3.2%, which is still above the Fed’s 2% target.
Mortgage rates will come down, Corcoran predicted but the Fed is going to hold firm on the federal funds ratev until inflation gets to where it has targeted.
The Housing Market Is Strong
“The housing market is strong. Everybody is surprised by it,” Corcoran told GMA. “Houses are not staying on the market. They all sell. One-third of them sell for over ask price and there are just not enough houses to go around.”
But as strong as the market is, it’s also frustrating for buyers.
The median sale price of a home in the U.S. is $414,633, according to Redfin. That’s up 2.2% year over year.
“There’s not a lot [of inventory] out there,” Corcoran said. “House prices are not going to come down. I believe that when the … mortgage rates come down … every buyer on the sidelines is going to jump into the market. As long as interest rates come down to 5% or 4% … I wouldn’t be surprised if houses go up 10 to 15% when that happens.”
Tips for First-Time Buyers
Corcoran’s advice for first-time home buyers who are ready to look for their ideal home? “You have to adjust your horizon, you have to adjust what you’re looking for,” she said on the broadcast. It’s not an easy thing, especially when you know your neighbor has bought their house at a cheaper interest rate and at a lower price than yours,” she said.
She also advised buyers to shop for a lower mortgage rate. “If you go to your main bank, they will usually give you, as a banker at their institution, one quarter percent off.”
Should You Consider an Adjustable-Rate Mortgage?
When asked if now is a good time to get an adjustable-rate mortgage, Corcoran said, “Of course it is. Because right now, adjustable rates are high, and they’ll adjust down when the rates go down.”
And when asked for her advice for people who have adjustable rate mortgages that are about to reset, Corcoran quipped, “You really only have two choices: You either pay the bank or you get out of town.”
How To Sell Your Home in This Market
If you’re ready to list your home, you shouldn’t have an issue selling it.
“Everything is selling today,” Corcoran said. Nationally, the average home sits on the market for 20 days.
“But if it was my house, I would wait until next year when all the buyers come off the sidelines when interest rates come [down], I’m going to get a lot more from my house than I would get right now.”
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This article originally appeared on GOBankingRates.com: Barbara Corcoran: Will Houses Be More Affordable in the Future?