Beware TV Experts When Trying To Time The Duplex Market

Last month Shark Tank’s tv real estate pundit Barbara Corcoran predicted housing and small multifamily property prices are going to go through the roof.

When?

When interest rates drop.

Corcoran believes the market is in a bottleneck right now. There aren’t enough properties available for active buyers in the market. Many would-be sellers don’t want to sell and give up the low interest rates on their current mortgages, only to be saddled with higher rates on a new one.

Those same higher interest rates mean a buyer’s monthly payment is also bigger than it was when rates were low. That means they can’t pay the same price for a duplex they may have been willing to when rates were lower. That isn’t because they don’t think it’s worth it. It’s because they may not qualify for a larger monthly mortgage payment. Of course, higher insurance rates have also contributed to a lack of affordability.

So, yes, I agree with Corcoran. Temporarily. If rates come down, more people will be able to afford to buy. High demand and low supply always leads to higher prices, regardless of what’s being sold.

However, I also disagree with her. If and when rates come down, and prices go up, those would-be sellers may seize the opportunity to put their duplexes on the market. That will increase supply. And when real estate inventory goes up, competition for buyers does  as well. That means properties typically need to be in better condition, or be value-priced to draw a buyer’s attention away from competitors.

Corcoran didn’t say when she expects rates to drop. The truth is, nobody knows.

The lesson is trying to time the market is nearly impossible. The perfect time to sell is when you want or need to, regardless of what tv pundits say.