"Starter homes are the worst part" — When Shark Tank's Barbara Corcoran advised first-time buyers to act fast

Shark Tank investor Barbara Corcoran addressed the challenges faced by first-time homebuyers during a Good Morning America interview on December 13, 2023. When asked whether young couples should wait to purchase their first home or get into the market today, Corcoran said that waiting might not be a good idea. She said:

"Well, starter homes are the worst part. It's the hardest thing to go out and buy a new home if you're just getting it started."

Corcoran's message to first-time buyers was direct: while buying a starter home might be tough, waiting might not be worth it. She said that as mortgage rates fall, house prices will tend to go up, making the market more competitive. To deal with these issues, she recommended that buyers use experienced brokers, get pre-approval for mortgages, and move fast to prevent paying more in the future.

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Shark Tank's Barbara Corcoran on whether first-time buyers should wait or act now

Interest rates and housing prices

Corcoran explained that while mortgage rates have been high, they have been decreasing steadily. She noted that if interest rates continue to decline, home prices will likely increase. The Shark Tank investor stated:

"If interest rates continue to come down as they will and everyone’s expecting it, prices will go up."

This suggests that as borrowing becomes more affordable, more buyers will enter the market, increasing competition and driving prices higher. When asked how low interest rates might go, Corcoran acknowledged the uncertainty but offered an estimate.

"Nobody knows. You want me to take a guess? Probably 6%," she said.

However, she warned that even at 6%, demand would rise, further pushing prices upward. This indicates that those waiting for lower interest rates may not benefit from significant savings if home values rise concurrently.

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Strategies for first-time buyers

For new homebuyers facing a competitive marketplace, Barbara Corcoran stressed that being prepared is key. The Shark Tank investor said to seek out an experienced broker who can spot opportunities, saying:

"What you should do is find yourself a great broker who knows how to hustle because there's always a deal to be had."

This implies that clients who work with experienced agents will have higher odds of owning a property. She also highlighted the importance of being financially ready. To improve chances, she suggested that clients apply for pre-approval on a mortgage.

"You have to get pre-qualified for your mortgage so you go into the market as an all-cash buyer," she explained.

By securing financing in advance, buyers can position themselves more favorably in negotiations, reducing potential delays and making their offers more attractive to sellers.

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Renting vs. buying

Corcoran also addressed the rental market, noting that rent levels had been relatively flat over the last year. She said that rises had been modest and that projections for the next year suggested little to no substantial increase in rental prices. This indicates that renting is still an option for those who are not yet prepared to buy a home.

However, the Shark Tank investor reiterated her homeownership stance that owning a house yields long-term economic gains.

"You’ve got to get in the game. You’ve got to buy something so you have something to trade up on as you move up the ladder," she said.

This indicates that owning a home may offer more opportunities for financial growth over time compared to renting.

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Shark Tank premieres new episodes on Fridays at 8 PM ET on ABC, and are available for streaming on Hulu.