Buy Now or Wait for Lower Rates?

As another year has passed with interest rates hovering in the 6s (and recently tipping over 7%), you may have hit the pause button on buying. You are certainly not alone. In a recent survey, 51% of potential buyers are waiting for rates to fall further before making their move (Source: Real Financial Progress Index from BMO Financial Group). But in the wise words of Warren Buffett, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” The other 49% of buyers are taking action and finding opportunities to get into their first or next home.

What should YOU do? While every buyer has their unique situation, goals, and needs, some factors need to be weighed in your decision:

Competition
When we look back on recent years’ 3-4% interest rates, it is not with overwhelming fondness. Yes, we were thrilled to help so many buyers get into homes at a more affordable monthly payment. But that was IF they could beat out the competition. Most buyers faced bidding wars, which caused record-breaking offers (easily $25k-150k over the asking price). That frenzy drove up home prices and values by double digits, year-over-year. Some buyers felt they won the lottery, and others experienced an incredibly stressful and disappointing couple of years.

Higher rates have significantly cooled down the competition. So our market is more balanced, meaning it is a level playing field between buyers and sellers. So many sellers and all lenders are actually offering incentives to entice buyers with fewer costs and lower interest rates, such as buydowns.

Read: What is a 3-2-1 Buydown?

Appreciation
When rates drop again (no experts predict it’ll be 3-4%, but hopefully somewhere in the 5s) and that wave of renters and other buyers jump into the market, we’ll see another surge of demand, which, you’ve guessed it, will drive up home prices even higher. If you can get into a home before then, what would that do for your property value? It could be another big jump! That boost in equity creates more financial opportunities for you (and a hedge of protection in uncertain times).

Adaptation
But of course, making a move now depends on your budget and if you can afford the monthly payment. Buyers succeeding right now have been tweaking their strategies:

• Searching for one less bedroom.

• Widening their search to more areas.

• Cutting back on unnecessary spending.

They are making it work (and looking forward to refinancing as soon as interest rates drop). But for them, the stability, personalization, and elevated lifestyle their new home provides are worth it.

Read: Are Low-Interest Rate Payments Holding You Back from Selling?

Bottom line: Purchase when the time is right for you rather than trying to time the market.
Your RE/MAX Alliance Agent is here to help you determine the advantages and disadvantages of house hunting in this market. Whether you can close by the end of 2026 (or 2027), they believe in your dream of homeownership and will help you take the next steps to make it a reality.

Sources: CREUniversity.com, Reuters.com, Home Mortgage Advisors