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Mortgage rates dropped to a two-year low last week, hovering around 6.08%, before inching up to 6.12% on Thursday. Barbara Corcoran, founder of real estate firm The Corcoran Group and longtime "Shark Tank" investor, says that the immediate impact will bring more buyers and sellers to the market, but there is still a big issue. Sellers with low mortgage rates don't want to give up their low percentage.
Corcoran, who sold her real estate company in 2001 for $66 million and now makes about $4.5 million a year from her investments, said this has helped lead to an overall shortage of homes for sale.
Related: Barbara Corcoran Needed to Make Job Cuts. Here's Why She Fired Her Mom First.
"60% of the sellers who own homes in America have rates under 3%," Corcoran told Entrepreneur. "So think to yourself, why would you want to sell your home and [have to buy at] a higher rate?
Corcoran says that rates will continue to drop ("I'm sure it will go down to somewhere in the [5% range] in the next six months or year," she says), but that's not a deal "when you're sitting on 3%."
Barbara Corcoran. Photo Credit: Christopher Willard/ABC via Getty Images
If you're a seller holding onto a home, Corcoran says there is one question to ask now: "Do I see myself here for the rest of my life?"
"That gets a lot of people out there going, What the heck? Let's jump off the fence and get on with living in a smaller place," she said. "It moves them along. So the interest rate helps in that way because it's knitting together the difference between the two."
A June estimate from Zillow showed that the U.S. was short 4.5 million homes in 2022 compared to the overall population, up from 4.3 million in 2021.
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