"4% more inventory a month" - When Shark Tank star Barbara Corcoran explained whether rising inventory could ease home prices

On March 28, 2024, Shark Tank investor Barbara Corcoran did an interview with Yahoo Finance Live. In it, she addressed whether increasing inventory levels could help lower home prices, given the persistent shortage in the market.

Corcoran explained that while inventory has seen a modest rise, it is not enough to significantly impact prices.

The Shark Tank investor stated,

"It's gotten a little bit better, maybe to the tune of 4% more inventory a month in the last three months, but no, there's such a shortage of houses."

Although housing inventory has increased slightly, Barbara Corcoran emphasized that this change is not substantial enough to impact prices significantly.

She explained that homeowners' reluctance to sell, driven by favorable mortgage rates, is a key factor maintaining the current market conditions.

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Housing inventory increase according to Shark Tank Barbara Corcoran: Is it enough to lower home prices?

Housing inventory and its impact on prices

Corcoran noted that while inventory has seen a slight increase, the overall shortage of available homes remains a significant issue. The limited supply continues to influence market conditions, preventing prices from declining.

She pointed out that the root cause of the shortage is homeowners' reluctance to sell, largely due to existing mortgage rates.

Many homeowners secured loans at lower rates in previous years and are hesitant to list their homes. The Shark Tank investor explained,

"The biggest problem again is interest rates..People who own homes have 3%, 4%, some of them even 2% mortgages—they don't want to give those up. That's why you have the bottleneck right now. That's why people aren't leaving their homes."

This situation limits the number of homes entering the market, sustaining high prices despite a slight increase in inventory. The demand for housing remains strong, with buyers competing for the limited available properties.

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Interest rates and home sellers' decisions

The reluctance of homeowners to sell is influenced by interest rates. Corcoran highlighted that many sellers consider the potential gains they could achieve if they wait.

She explained that mortgage rates play a crucial role in determining seller activity, as lower rates would encourage more people to list their homes. She said,

"If it goes to 6%, people are going to get so much more for their houses—why would they even think of selling?...If it hovers somewhere in the 7%, the market is going to be so active, and they're going to get more for their houses too."

The Shark Tank investor's perspective suggested that unless rates change significantly, sellers are unlikely to enter the market in large numbers.

The limited inventory keeps prices high, as potential sellers prefer to hold onto their homes rather than move under less favorable conditions.

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Challenges for first-time buyers

Corcoran also discussed the challenges faced by first-time homebuyers in the current market. She explained that purchasing a home remains difficult due to high competition, rising prices, and limited options. Many first-time buyers struggle to compete against cash offers and higher bids. She noted,

"For the first-time buyer, they're the hardest hit...They have to compete the hardest, have the least amount of cash to compete, so they're not making cash offers, and they're losing four to five houses that they're interested in."

The Shark Tank investor also provided a strategy for buyers looking for opportunities outside of traditional listings. She advised potential buyers to take a proactive approach in their search for homes.

"Run into a community, see which houses you like, and leave love notes on every door," she suggested.

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