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We often hear buyers say, “We are waiting to buy until the interest rates go down.” On the surface, this comment makes sense. Why would anyone want to buy now if they knew the interest rates would be going down, and they could potentially have a lower monthly payment? That said, here are some things to think about.

First, we can never predict in detail what will happen in the future. Of course, economists will make their forecasts, which may end up being correct, but sometimes there are things that happen in the world that are out of our control—the war in Iran, to give just one example. I always tell clients—we know what is going on now, but we don’t know what may happen in the future.

In our current market, the interest rate is higher than it was during the height of the market, which occurred during the COVID-19 pandemic from 2020 to mid-2022, but it is very unlikely that we will ever see a rate that low again. So, if you are waiting for an interest rate as low as 2 to 3%, you will most probably never buy.

Some buyers are not realizing all of the benefits of buying now. Yes, the interest rate may not be coming down soon, but a buyer can potentially get below list price and/or a seller concession to pay for a rate buydown or closing costs or both. Buyers can also ask for more during the inspection period in our current market. Once the interest rate does go down a bit, more buyers will be out, and there will be more competition. At that point, all or most of the perks of buying now will most probably be gone. Instead of getting below list, a seller concession and many items addressed after inspection, buyers will most likely pay above list and default to asking for limited inspection items to be addressed because they are competing for inventory.

I was talking to a lender recently who sent me actual numbers to show what the cost of waiting looks like. I have shared his example below. I find it helps to see the full picture when there are numbers involved.

The monthly payment went up, and the down payment increased due to the home appreciating by 5%.

Some buyers do not think about appreciation and that home prices may be higher when they decide they are ready to buy. The example above and the other positive things mentioned about buying now are reminders that it is not all about the interest rate. Another thing to think about is that you can potentially refinance and get a lower rate in the future; although, we can’t promise that.

At TK Homes, we are seasoned agents, and we look at the big picture, not just at the interest rate. Now may be the best time to buy. If you are interested in buying or selling, contact a TK Homes agent today, and we will discuss your unique situation with you and move towards making your real estate goals a reality!
 

~ Written by TK Homes REALTOR®, Mary Smith