Barbara Corcoran, Founder of The Corcoran Group and Shark on ABC’s “Shark Tank” joins Yahoo Finance’s Zack Guzman to discuss the latest on the housing market, as mortgage rates remain at record lows.
ZACK GUZMAN: Yeah, and I wanted to ask you too about real estate. Obviously, it's in such an area of expertise for you. And obviously, we've seen home prices continue to rise on that front as mortgage rates continue to drop. And we've seen continued strength at the top end of the market as well.
So what's your-- what's your take there as how the election could impact those trends that we've seen play out here? Because we've seen mortgage applications to purchase a home actually came in about flat after falling for four straight weeks. So what's your take on the strength of the housing market now and how the election could change it?
BARBARA CORCORAN: I don't think the election is going to have much to do with the housing market. It's like a horse that's run out of the bar-- the barn at about 100 miles an hour, and there's no stopping it. Of course, it's on an even market. The suburban areas, the wealthier vacation areas, the country areas are all skyrocketing with the shortage of listings and prices going up far beyond what's reported. Because you have to realize, when price increases are reported by any organization, it's based on closings, not on deals that were just made, which are always made three months in advance.
So I think the housing market is exploding well beyond what's being reported, and I think that's going to come out in the next couple of months. But so far as how the election will affect it, it's amazing. It's almost like the strength is beyond the election that nobody's paying attention.
But when I say strength, of course, it's a slanted strength because that's not true of the coastal cities, and it's certainly not true of New York City, which is taking it in the gut, of course. Almost every sector of the market except for the cheap rentals and the very inexpensive purchases-- they are still alive and well-- but 90% of New York City is in the worst shape I have seen it in many, many years. But the only-- I'm trying to think of what to say that's optimistic here.
Here's the optimistic part. If you're a rich guy, and you're really dying to buy in New York City, now's the time. You can go in and clip anything for 30%, 35% off. So you get that mansion in the sky that you've always dreamed about, and I truly believe that in three years time, those values will be recouped, and you'll have all that money back. But other than that, it's not a pretty picture in the big city markets at all.
ZACK GUZMAN: Yeah, for the bulk of the houses, I mean-- we talk about people who might not be focusing on a luxury portion of this-- there are a lot of fears though that that boom might have happened-- when we talk about the shift to the suburbs for middle class homes or that kind of piece of the market here-- might have already happened.
If you look at mortgage applications falling for four straight weeks now being flat. There are people looking at that key piece of this and saying, well, maybe that trend's over. We've hit peak house here and could be the start of a downturn. So what do you say about that?
BARBARA CORCORAN: Come on, Zack. You're smarter than that. Why are you even repeating that kind of stuff? Listen, mortgage application-- applications have leveled off because we went through such a huge catch up. But with this cheap money around, nobody's ceasing buying. One of the main reasons why mortgage applications-- applications are down is because people can't get their hands on the houses.
For every two buyers, there's one house to be had. So there's an extreme slanted market with a shortage of inventory, and that explains those numbers. No, not at all. The housing market is so hot, I almost feel like I should apologize for it. It's not even my market, OK?
But the housing market is so strong right now, we're not going to make up for this lost time for a lot of months to be coming up, and prices are going to price out all the starter homes, of course, as time goes on. But every other market is going to be going like hotcakes. And you can count on it for the next three to six months easily. There's too much pent up demand. There's too short a supply, and it's going to take a while to even that score out.