Mortgage rates remain elevated, home prices are high, and many expect the Federal Open Market Committee (FOMC) to leave interest rates steady. However, real estate mogul and “Shark Tank” star Barbara Corcoran previously told Fox Business that when interest rates drop one percentage point, “home prices are going to go through the roof.”
Real estate experts agree with the general direction of Corcoran’s call, but not on how it plays out across the board, with the effects predicted to land very differently depending on where a buyer or seller sits in the market.
Keep Learning: 10 Common Mortgage Mistakes That Can Hurt Your Finances for Years
Check It Out: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Here’s who could benefit and who could have the biggest challenges if rates start to fall.
Lower Mortgage Rates Could Boost Demand Depending on Inventory
A drop in mortgage rates would immediately boost affordability for many buyers by lowering monthly mortgage payments. That alone could entice households that have been on the fence to begin shopping again. For homeowners who have been holding onto their homes for years to keep their low mortgage rates, a rate drop could finally give them a reason to sell.
Michelle Griffith, a luxury real estate broker at Douglas Elliman, said lower rates don’t necessarily mean home prices going through the roof. It depends on what happens to inventory.
“If demand increases faster than supply, prices will rise,” Griffith said. “If lower rates encourage more sellers to list their home, we could see a healthier, more balanced market with increased transaction activity rather than dramatic price appreciation.”
First-Time Buyers Could Face the Toughest Competition
First-time buyers may not get much relief even if the overall market remains fairly stable. “The majority of forecasts for 2026 have the national prices rising in the low single digits (1% to 4%) and not spiking,” said Cameron Walker, a real estate expert at Clever Real Estate. Instead, he called the market a “reset, not a rebound.”
The biggest pressure is likely to be at the lower end of the market, where inventory remains thin and demand is strongest. If rates fall as Corcoran predicts, first-time buyers may be chasing the same entry-level homes, increasing the likelihood of bidding wars in desirable neighborhoods.
“First-time buyers expecting prices to drop with Corcoran’s warning will continue to lose as prices hold or increase with low rates and high demand,” Walker said.
Existing Homeowners Stand To Benefit Most
Current homeowners are among the biggest potential winners. If home values hold or continue to rise as mortgage rates ease, Walker said many will see their equity go up and may find it easier to sell and move into another property. “Sellers of well-priced homes in strong locations benefit due to renewed competition.”
Walker also agreed that buyers who move ahead of the crowd may benefit. Rather than waiting for the best mortgage rates, they can purchase a home now and refinance later if rates continue to drop.
The Bottom Line
Corcoran is right to a certain degree, according to experts. Buyers who wait for rates to drop before purchasing are likely to end up paying more, not less, once they factor in the competition. Getting pre-approved now and shopping in markets where inventory is already loosening is better than waiting for interest rates to fall.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.