The Myth of Waiting: Why Holding Out for Lower Rates is NOT in Your Best Interest

Holding out for lower interest rates could cost you tens of thousands of dollars – or more. There is an expression in real estate (of which I am not overly fond) that says, Marry the house, date the rate. It means, in loose terms, that home prices have risen 76 of the past 81 years. The chance of home prices coming down soon is slim to none. (Four of the five years when prices did not rise were in the 2008 era.) Trust me, dating isn’t all it’s cracked up to be.

Historically, the AVERAGE interest rate is 7%. Rates hit a 20-year high in October 2023 (near 8%). Low interest rates have spoiled this past generation of home purchasers as they hovered in the high 2s, 3s, and low 4s. We are no longer in that market, but hold on . . .

Unlike home prices, interest rates are bound to come down. The problem for buyers is that, when they do, prices will rise fast and furious. Frustrated buyers will flood the market to finally buy the house of their dreams. The Catch-22 is, the house of their dreams will then be priced too high because they waited and tried to “time the market.” Don’t do it.

more inventory and lower interest rates

In El Paso County (Colorado Springs and surrounding areas), there were only 1,403 available single-family homes for sale in March 2024. That was up more than 24% from last year’s inventory, but down considerably for the county average of around 4,000 homes for sale in a “normal” market.

When Will Interest Rates Go Down?

I can’t emphasize enough the urgency I feel for people who want to buy to do so as soon as is possible before rates come down. If you are ready, willing, and able to purchase a home, I urge you to do so now. Find a lender who will refinance for FREE when the rates come down. Then you will not find yourself in the maelstrom that will be the housing market when the Feds finally decide to lower rates.

We expected rates would drop in June, but that no longer seems to be the case. It may not even happen in September, or any time this year, so don’t wait.

When rates fall, it will trigger bidding wars like we saw during the pandemic, what many call “The Unicorn Years.” Those were the magical years when there was a scarcity of available homes and prices soared to unprecedented heights. Buyers will be falling swiftly and intensely and competition will be again be fierce.

As interest rates rose, the buying power of prospective home owners sank.

Buyers are getting antsy to move. Just six months ago, according to a survey by Bank of America, 62% said they will wait for lower interest rates. That’s down from 85% a year ago! Many were also waiting for lower home prices. That will not happen in the foreseeable future. If you’re ready, willing, and able to move, I strongly urge you to do so.

Housing Market Predictions

As people get used to the higher interest rates, more and more will start to get back into the house hunting mode. But Sellers who are locked in with their 3% and 4% interest rates will be hard-pressed to give that up to find an affordable house to trade for. According to the Bank of America survey, more than 80% of today’s mortgages are 5% or less. That’s an incentive for Sellers to stay put, and keeps inventory low. It also keeps us in a solid Seller’s Market.

According to the current administration, the higher interest rates coincide with a strong economy. That may indicate job and income stability, and mean you can more comfortably purchase a home. Although higher interest rates may have an impact on affordability, they’re just one of many factors in the decision to buy a home. You have to evaluate your personal financial situation, your long-term goals, and current local market conditions before deciding what’s right for you and your family.

If you’re looking for someone to give you professional guidance, call Mimi Foster for a no-obligation consultation regarding your personal goals. Decades of experience and knowledge make her a perfect choice for your real estate needs.

By Mimi Foster

About the Author

Mimi has received the honor of being voted one of Colorado Springs' Best Realtors five years in a row. With over two decades of experience, she is committed to making the home buying/selling process as easy and enjoyable as possible. Read Full Bio…

Helping buy and sell homes throughout Colorado Springs,
Old Colorado City, Manitou Springs, and surrounding areas

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