Finance

Three reasons why Barbara Corcoran says this housing market is the best of her life

Three reasons why Barbara Corcoran says this housing market is the best of her life

The booming real estate market has made it almost impossible for even a Federal Reserve Governor to find a home.

Fed Governor Christopher Waller attributed the skyrocketing house prices to the convergence of a pandemic-induced spike in demand and low interest rates in a speech Thursday, adding that the ‘crazy’ real estate market has hampered his own search for a new home in Washington D.C.

But headaches for some homebuyers mean opportunities for savvy investors.

In a new interview, real estate guru and “Shark Tank” panelist Barbara Corcoran hailed the current real estate market as the best real estate investment opportunity of her life.

She put forward three reasons for the favorable environment: an initial delay in recognizing the investment opportunity gave the market longevity; the constant rise in rents throughout the country; and the persistence of low interest rates.

“The return on investment is phenomenal, and has been in so many markets in so many cities across the United States,” she told Yahoo Finance editor Andy Serwer on Feb. 17. “It’s probably the best market I’ve ever seen in my life.”

During the pandemic, the U.S. housing market boomed amid a surge in demand as COVID-19 closings increased the importance of people’s homes and buyers sought to take advantage of low mortgage rates.

A surge in house prices lagged behind the COVID-19 shutdowns in the spring of 2020. By November of that year, however, house prices were up 9.5% from November 2019, according to the S&P CoreLogic Case-Shiller Home Price Index.

The longevity of the strong market owes in part to this initial lag in housing investment, Corcoran suggested.

“There was a shyness in the market – people were slow to react to real estate investments,” Corcoran said. “Now everyone is getting into it, but it was sort of behind all other types of investments. So you had a little bit of a rest period.”

Corcoran also cited rising rents nationwide as a driver of the boiling housing market. In December, average monthly U.S. listed rents rose 14.1% year-over-year to $1,877, the largest annual increase since February 2019, according to red fin.

“Rents have gone up nationally, and if you choose your properties carefully, like if you invest in, say, Orlando, rents have gone up almost 30%, it’s crazy,” she says. “So imagine what that does to the bottom line.”

A “sold” sign is posted outside a single-family home in a residential area, in Glenside, Pa., Wednesday, Aug. 4, 2021. (AP Photo/Matt Rourke)

When Corcoran describes the housing market as the best of her life, she’s drawing on decades of experience in real estate. In 1973, at age 23, Corcoran used a $1,000 loan to start a real estate company called Corcoran Group, which employed seven real estate agents who sold property on New York’s Upper West Side.

Over the years that followed, the company built an international presence and reputation in luxury real estate. Corcoran sold the company in 2001 for $66 million.

Low interest rates are the final reason Corcoran remains bullish on the housing market. Although Corcoran spoke to Yahoo Finance in mid-February, before rates on the most popular home loan (the 30-year fixed mortgage) exceeded 4% — the highest level since April 2019.

“What’s so important – what we all take for granted, like our right to breathe – money is so cheap,” says Corcoran. “So you can have very high leverage.”

Corcoran offered simple advice: Get into this housing market as fast as you can.

“I’ve never seen it more enticing and with more promise,” she says.

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