Benzinga - Shortly after Tesla CEO Elon Musk warned of a commercial real estate market meltdown, “Shark Tank” star Barbara Corcoran weighed in on the same topic.
What Happened: The commercial real estate market is in trouble, Corcoran said in an interview with Fox News last week. Sellers are refusing to move from their homes since they do not want to take on higher interest rates and buyers are afraid of purchasing smaller spaces, she said.
“In fact, they’re getting half the house they would have only two years ago. So you get a Mexican standoff going on,” she said of the concern buyers have.
Rate Cut Could Change Things: “Right now, what everybody's afraid of are high interest rates but the minute those interest rates come down, all hell is gonna break loose and prices are gonna go through the wall,” she said.
Corcoran said she sees buyers returning in droves as interest rates go down. “If interest rates go down by two points it's gonna be a signal for everybody to come back out and buy like crazy,” she said.
When asked about the S&P/Case-Shiller house price index, which fell 1.1% year-over-year, Corcoran highlighted the uneven trend. She noted that house prices were going down in the coastal areas but were going up in the Southwest. In some cities, prices were up by about 20% in six months, she added.
The real estate mogul, however, ruled out a bubble like the one that came before, as people are investing their hard-earned money in the market and people aren't overleveraged, she said.
Corcoran also spoke about commercial real estate properties staring at foreclosures. “No one has the confidence to buy it now. No one really believes it’s going to turn the corner,” she said.
Blaming work-from-home policies, the “Shark Tank” star noted that the best offices in midtown Manhattan are only 50% occupied while the vacancy rate in secondary cities is about 20%.
“I don’t see that turning around. I think it’s going to be a bit of a bloodbath before it gets better,” Corcoran said.
Read Next: How To Invest In Commercial Real Estate
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