If you’re thinking of buying a home, there’s no day like today to make the move, says real estate mogul Barbara Corcoran.
The rate on the benchmark 30-year fixed mortgage declined slightly to 6.79% last week, well below October’s peak of 7.79%, according to Freddie Mac. For homebuyers, the prospect of waiting for lower borrowing cost might seem awfully enticing.
But Corcoran, Shark Tank star and founder of the Corcoran Group, begs to differ.
In a conversation on Yahoo Finance Live (video above), Corcoran cautioned lower rates could bring more buyers into the market, boosting competition and sending already lofty prices “through the roof.”
“If interest rates come down another point by year end, everybody and their mother and their in-laws are going to look for a new house, and the competition’s gonna be so fierce that house prices will have to go up,” Corcoran said.
Home prices grew at a record pace in January, as more buyers came off the sidelines. And that fierce competition has led to an eruption of bidding wars, which often drives prices even higher.
National Association of Realtors (NAR) data shows that during the first month of the year, the typical seller received 2.7 offers, and 16% of homes sold over the asking price.
An important contributor to all of this is an inventory crunch. In 2023, existing home sales hit the lowest level since 2005, as would-be sellers who are locked into low mortgage rates stayed put.
“There is such a shortage of houses right now, so prices have gone up despite everybody singing the blues,” Corcoran said. “It happened simply because there are a lot of buyers and not enough houses available.”
Supply is slowly improving. New listings jumped 3.8% in February to the highest level in 17 months, while the total supply of homes for sale rose to the highest level in a year, according to Redfin.
It’s a sign buyers and sellers are getting more comfortable with higher mortgage rates, says Lawrence Yun, NAR’s chief economist.
“More people are adjusting to the new normal for mortgage rates, which appears to be between 6% and 7%,” Yun said on Yahoo Finance Live. “There is a sizable group of delayed sellers who have been postponing, and they will begin to list their property.”
While more new listings signals good news for buyers, a dramatic improvement in inventory may take some time. Top economist Mark Zandi warned the market’s recovery will take “several years” to materialize.
“We can say with strong conviction that the housing market in terms of home sales and demand has probably bottomed,” Zandi explained. “Everything indicates [the 30-year mortgage rate] will likely go to 6% rather than 8%, and if that’s the case, we should start to see improvement, but this is a process.”
So what should you do if you’re on the sidelines, hoping for mortgage rates to drop or more home to come on the market? Corcoran’s advice is simple: Don’t wait. She advises that “right now” is always the best time to buy, and to give yourself an edge in a tight market, “write a love letter” to the owners of the house you’re eyeing.
“Run into a community, see which houses you like and leave love notes on every door,” said Corcoran, who suggested crafting a personal message around what you like about the home, even if it’s not for sale.
“It works. The last four houses I bought were not on the market. I just picked out the house I like best and eventually the people called [back],” she said.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
