According to statistics, in June this year, the proportion of homes in the United States reaching the million-dollar level skyrocketed to 8.5%. In the San Francisco Bay Area, specifically in San Jose, the median home price surpassed 2 million, making it the first metro area in the US with a median above two million. Despite this, experts recommend not waiting for the Federal Reserve to lower interest rates and suggest buying a home now!
Self-made real estate millionaire and star of “Shark Tank”, Barbara Corcoran, isn’t afraid of high mortgage rates. In an interview with Bloomberg TV, she expressed that worrying about interest rates is a waste of time because you can’t control them.
Corcoran stated, “When rates drop another percentage point, you will see what happens to prices.”
At the time of her remarks, mortgage rates were declining. Just last month, weekly mortgage rates fell to the lowest level in over a year, and daily rates plummeted to a 52-week low. While fluctuating since then, the situation is much better compared to last year as the costs of home purchase loans or refinancing existing mortgages are cheaper. However, she believes that the more interest rates drop, the more people will enter the market, leading to skyrocketing prices.
Corcoran’s prediction is in line with her previous statements. Earlier this year, she mentioned that a one percentage point drop in mortgage rates resulting in a 10% increase in housing prices wouldn’t surprise her.
Last summer, she also highlighted that “now is a great time to buy because as rates drop, everyone is waiting for them to drop, and even if they drop a bit, people will rush back into the market.” Prices will explode, and you’ll end up paying more money for the same property. Corcoran once forecasted a 10% to 15% price increase.
Having experienced the early 1980s when mortgage rates soared to 18% and remained in double digits for about five years, Corcoran acknowledged that high mortgage rates are not the sole obstacle deterring homebuyers. High rents and home prices are also major concerns.
“I’ve been worried about this issue on two fronts,” she said, “Rents keep rising… that’s a real concern because people can’t afford rent based on their incomes. And I’m more concerned about whether people can achieve their American dream of buying their first home because the entry-level market is being hit the hardest.”
During the pandemic, rents surged, but with a surge in multi-unit housing supply, rents have started to decline. Nevertheless, rent remains very high, and the wave of apartment supply won’t last forever. On the other hand, since the outbreak of the pandemic, the wages needed for Americans to buy entry-level homes have nearly doubled. Moreover, across all 50 major metropolitan areas, renting an entry-level home is still cheaper than buying one.
According to Redfin statistics, the proportion of homes in the US valued at over a million dollars has reached a record high. The median selling price across the US rose by 4% compared to the same period last year in June. Though price growth has slightly slowed since the beginning of 2024, prices have been consistently rising over the past year, pushing many homes over the million-dollar mark.
Based on statistics from the National Association of Realtors (NAR), in the second quarter of this year, 89% of metro areas saw an increase in the median home sales price, slightly lower than the 93% seen in the first quarter. Remarkably, for the first time since 1979, a metro area in the US – San Jose, California – has a median price exceeding two million dollars, standing at $2.008 million.
NAR’s Chief Economist, Lawrence Yun, stated, “Record-high home prices in most metro markets bring both good and bad news. This is good news for homeowners who have seen progress in wealth building. However, it’s challenging for those looking to buy a home because the income qualifications have nearly doubled compared to a few years ago.”