Shark Tank's Barbara Corcoran explains why house prices are set to go 'through the roof'

Shark Tank star Barbara Corcoran has revealed when housing prices will go 'through the roof'.

The self-made real estate millionaire said a fall in interest rates is key - to lower the cost of borrowing and attract buyers who will bid up prices.

The 'magic number' is a fall of 1 percent to take mortgage rates under 6 percent. 

'If rates go down, just another percentage point, prices are going to go through the roof,' Corcoran said in a Fox Business interview Wednesday.   

'Everyone will come out and buy. There are probably 10 buyers on the sidelines [for each home on the market] waiting for interest rates to come down,' she continued. 'So everybody's going to charge the market.'

As of latest data from government-backed lender Freddie Mac from March 21, the average 30-year fixed rate mortgage is 6.87 percent. 

That is down from the 8 percent rates seen in October last year, but still double the historically low rates of around 3 percent seen during the pandemic. 

What is needed to get the mortgage rate to fall below the 6 percent that Corcoran sees as 'the magic number that people get juicy about'?

While the Federal Reserve does not directly set mortgage rates, the benchmark borrowing rate it sets does indirectly influence the amount Americans pay on a loan to purchase a home.  

Mortgage rates track the pattern of 10-year Treasury Yields, which are determined by a range of factors including inflation, economic growth and the Fed's benchmark funds rate.

The Federal Reserve left interest rates unchanged for the fifth consecutive meeting earlier this month, keeping benchmark borrowing costs at a 23-year high between 5.25 and 5.5 percent. 

The Fed's series of aggressive rate hikes were intended to pour cold water on rampant inflation, which peaked at 9.1 percent in June 2022.  

At its latest meeting, Fed policymakers penciled in three quarter-percentage point cuts by the end of the year - but did not commit to a date when it might start decreasing rates. 

If interest rates fall, this will then have an impact on mortgage rates.

But Corcoran warned Americans that instead of getting a cheaper deal when rates come down, the housing market may actually heat up. 

Corcoran warned Americans that if interest rates come down, it will mean house prices will go up even further as demand to buy suddenly soars

As of latest data from government-backed lender Freddie Mac from March 21, the average 30-year fixed rate mortgage is 6.87 percent

'If you wait for interest rates to come down by another point, I don't think you'll gain, I think you'll wind up paying more because I wouldn't be surprised if real estate went up by another 8 or 10 percent if interest rates come down another point,' she said.

Elevated mortgage rates and a historic shortage of homes for sale has meant that house prices are already high - pricing many Americans out of the market. 

In 2023 alone, the US housing market gained $2 trillion in value.

Corcoran's comments come after a survey from real estate listings company Realtor.com revealed that the majority of homebuyers would need mortgage rates to dip to 5 percent before they followed through on a purchase. 

Some 72 percent of potential home buyers said pulling the trigger would be feasible if mortgage rates dropped below 5 percent

According to the survey of 5,000 US consumers, conducted during the first week of November when rates were at their highest, about 18 percent of Americans said they were waiting for rates to fall below 7 percent.

If they dropped below 6 percent, an additional 22 percent of respondents said they would buy a home.

But the vast majority - some 72 percent - said rates would need to go below the 'magic' mortgage rate of 5 percent before they would sign on the dotted line for a home.