House prices won't fall – and could soar 15% when mortgage rates drop, says 'Shark Tank' investor Barbara Corcoran

• Home prices won't drop, and could surge 15% once mortgage rates fall, Barbara Corcoran says.
• There's a shortage of homes for sale as people don't want to give up their cheap mortgage rates.

Home prices won't fall, and could jump as much as 15% once mortgage rates drop, Barbara Corcoran predicts.

"I can tell you this – house prices are not going to come down," the "Shark Tank" investor and real-estate tycoon told "Good Morning America" this week.

In response to a massive inflation spike last year, the Federal Reserve has raised interest rates from almost zero to more than 5% since last spring. As a result, the average 30-year mortgage rate has surged from about 3% at the start of 2022 to 7.3% – the highest level since 2000.

Steeper interest rates encourage saving over spending and increase borrowing costs, meaning they typically pull down the prices of assets such as houses. However, home prices were down just 1% in May from their peak last June, the S&P Case-Shiller index shows.

Prices have been shored up by a shortage of homes on the market, in part because many owners are reluctant to sell and give up the low, fixed mortgage rates they've locked in.

Corcoran started to say that "all hell's going to break loose" once the Fed cuts rates and mortgages get cheaper.

"Every buyer on the sideline is going to jump into the market as long as the interest rates come down to 5% or 4%, and houses are going to go up in price all over again," she said. "I wouldn't be surprised if they go up by as much as 10% or 15% when that happens."

The Corcoran Group founder also said a lack of inventory has resulted in a third of homes selling above the asking price, and the average home being listed for only 20 days before it's snapped up.

"The housing market is as strong as ever," she said, although she noted it would be wise to wait until next year to sell.

"When all the buyers come off the sidelines, when interest rates come down, I'm going to get a lot more from my house than I would get right now," Corcoran said.

The investor's touted the health of the housing market before. In June, she suggested home prices could jump as much as 20% once interest rates drop by two percentage points.

She also dismissed concerns of a housing bubble in southern states such as Florida, arguing that people are speculating less and using more cash than debt compared to the mid-20 00s housing mania.