O'Leary urges caution for homebuyers

[UNITED STATES] Shark Tank’s Kevin O’Leary, renowned investor and entrepreneur, has issued a stark warning to potential homebuyers amid ongoing market volatility. O'Leary, who is known for his blunt and sometimes controversial opinions, suggests that now is not the time to purchase a home, calling real estate an “awful investment” in the current economic climate. His comments come as rising interest rates and high home prices continue to create uncertainty in the housing market.

The Housing Market's Rocky Terrain

Kevin O’Leary's latest remarks have added fuel to the ongoing debate about whether now is the right time to buy a home. The real estate market has been under significant pressure in recent months, with rising mortgage rates and an inventory shortage pushing home prices higher. According to the U.S. Federal Reserve, the benchmark interest rate, which has been steadily increasing over the past year, has made financing a home purchase more expensive for many buyers.

“The idea that buying a home is always a good investment, it’s just not true in the current climate,” O’Leary remarked during a recent interview on a financial news platform. “With interest rates climbing and home prices still elevated, you’re not getting good value for your money."

Why O'Leary is Cautioning Buyers

O'Leary’s criticism is rooted in the financial principles that he typically advocates for. When assessing the long-term value of a home, O'Leary points out that the current economic landscape makes it a tough sell for many.

For one, the 30-year fixed mortgage rate has more than doubled over the past two years, reaching upwards of 7%, which increases the cost of borrowing. O’Leary explains that, at this rate, buyers are locking themselves into large monthly payments with little opportunity for quick return on investment. “In real estate, you don’t want to be over-leveraged, and right now, that’s what many people are doing,” O’Leary said.

Another key concern is the disparity between home prices and wages. According to data from the National Association of Realtors (NAR), the median home price in the U.S. hit a staggering $415,000 in early 2025, nearly 50% higher than it was a decade ago. Meanwhile, wages have not kept pace with these rapid price increases, making it harder for many to afford a home without stretching their finances to their breaking point.

The Impact of Rising Mortgage Rates

Interest rates play a central role in O'Leary’s warning. As borrowing costs rise, O’Leary believes many prospective buyers are being priced out of the market. In fact, mortgage applications in the U.S. have dropped significantly as higher rates discourage home purchases.

Rising rates also have a direct effect on the overall economy, influencing consumer spending patterns and contributing to higher levels of debt. The Federal Reserve’s decision to increase rates was aimed at curbing inflation, but the ripple effects are being felt by those hoping to purchase a home or refinance their mortgage.

Is Real Estate Still a Safe Bet?

Despite his warning, O'Leary is not entirely dismissing real estate as an investment vehicle. He acknowledges that certain markets may still offer value, particularly in areas where the economy is strong, and job growth is robust. “There are markets where real estate remains a solid choice, but you need to be extremely selective,” he cautioned.

He suggests that potential buyers focus on the long-term viability of their investments, taking into account factors such as local economic trends, infrastructure development, and future job opportunities. Additionally, he emphasizes the importance of not overextending financially, urging buyers to make sure they can comfortably afford the property without putting themselves at risk of financial distress.

Looking at Alternatives: What Investors Should Consider

For those looking to grow their wealth through real estate, O’Leary suggests alternative approaches. One recommendation is to invest in real estate investment trusts (REITs), which allow individuals to gain exposure to the real estate market without the complexities and risks of direct property ownership. “REITs are a much better option right now, especially if you want to diversify your portfolio while avoiding the heavy debt burden of home ownership,” O’Leary explained.

Another option he points to is focusing on other asset classes, such as stocks, bonds, or even private equity, which may offer better opportunities for return with lower risk. By remaining diversified, investors can hedge against the unpredictability of the housing market.

The Takeaway for Homebuyers

Kevin O'Leary’s advice is clear: if you are considering purchasing a home in the near future, be cautious. With high interest rates, inflated home prices, and an uncertain economic outlook, buying a property right now could be a risky move for many. Buyers should carefully assess their personal finances, consider alternative investment strategies, and, if possible, wait for a more favorable market.

For those who are already homeowners or looking to invest, O’Leary suggests remaining vigilant, keeping an eye on shifting economic conditions, and ensuring that their property remains a long-term asset rather than a short-term burden.

While O’Leary’s stance on real estate might seem harsh to some, it offers a sobering perspective on the current market dynamics. As mortgage rates rise and home prices remain high, it is clear that the days of easy real estate gains may be over for now. Buyers must take a calculated, informed approach to homeownership, and perhaps explore other avenues for investment as the market continues to evolve.