Homebuyers in today’s market are facing a tough question: buy a house now, or wait until mortgage rates and prices maybe come down?
If you buy now, you can start putting money into owning what, for most people, is their biggest asset, but you could be stuck paying a high monthly mortgage rate. On the other hand, staying on the sidelines means you could get a potentially lower rate later on at the risk of missing out on home price appreciation.
To make matters even more complicated, the threat of a recession is making it harder to make a financial decision as drastic as buying a house.
However, some homebuyers are sick of waiting for rates to come down or for the economic picture to clear up. Here’s why they’re ready to jump in headfirst.
Building up wealth
Aspiring homebuyers have watched prices skyrocket in recent years, and many aren’t keen on missing out on future gains. These homebuyers are of the mindset that the most important thing is to simply buy in early and build up home equity, similar to the stock market mantra of “time in the market is better than timing the market.”
To Bria Scott-Fleming, buying a house was one of her top priorities.
“I’ve been renting since I was 23, and I’m 32 now. I thought about how much money I’ve given away to landlords or apartment complexes. It’s so much money that I spent without building any type of equity,” Scott-Fleming told BI.
Scott-Fleming, a real-estate agent in the DC metro area, closed on a house earlier this month. She’s also seeing similar sentiment from her clients, especially with rent prices climbing.
“People are still buying, people are still contacting me and saying they’re interested,” Scott-Fleming said. “Some people are intimidated by process, but the rents in DC are high, too.”
Mortgage rates aren’t coming down
Many homeowners aren’t holding on to the hope of lower mortgage rates, especially not the sub-3% levels during the pandemic. It’s unlikely the Federal Reserve will cut rates anytime soon, and mortgage rates are actually creeping up in response to Moody’s downgrade of the US credit rating last week. On Monday, the average 30-year fixed rate crossed above 7% for the first time since early April.
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“People have been saying mortgage rates are going to drop for the last three years, but they haven’t yet,” Oscar Martinez, who works at a plastic refinery in Texas, told BI. “I don’t think they’re going to drop anytime soon.”
After living at home and saving up enough money, the 23-year-old Martinez recently took the plunge and bought a house in Texas last month, securing a 6.5% interest rate. From his perspective, it would be nice if interest rates came down — in which case he would refinance — but Martinez isn’t counting on that happening. He’s happy with his decision to buy and has plans to renovate the house to increase its property value.
“My opinion is that if you have the money, do it now,” Martinez said of buying a house.
Lemount Griffin, a 36-year-old logistics manager, is in the market for a house in the greater Seattle area. He’s not waiting for rates to drop before buying, either.
“I’m looking to buy pretty much whenever I can,” Griffin said. “I’m not going to hold out for a certain rate and wait on the Fed to cut because they’re probably not going to do it until September or something.”
Griffin’s strategy is to buy mortgage points — meaning that he pays an upfront fee to the lender in exchange for a lower interest rate on the loan. And similar to Martinez, Griffin will also take advantage of an opportunity to refinance down the road, should one arise.
Lower rates aren’t necessarily a good thing
Economic uncertainty can turn away potential buyers, but for Griffin, it’s actually another reason to buy a house sooner rather than later.
“I do want to buy as soon as possible because I think it’s possible that Trump is going to replace Powell with somebody crazy, and his replacement will drive up inflation and housing prices,” Griffin said, referring to Powell’s term as Fed chair ending in May 2026.
According to Chen Zhao, Redfin’s economics research lead, if the president successfully pushes the Fed to cut rates, higher inflation and mortgage rates are likely outcomes. If bond investors perceive a threat to the Fed’s independence, they’ll anticipate a higher risk of inflation in the future and sell off bonds, sending long-end rates higher.
For that reason, Griffin thinks the housing market could get even more expensive, which is why he wants to buy now. “I feel like it should be done before 2026,” Griffin said of buying a house.
Fed independence aside, there’s also a concern that lower rates will disrupt supply and demand dynamics in a housing market with low inventory. Martinez is concerned that lower rates will send demand spiking as eager homebuyers snatch up homes, bidding up prices.
“If the interest rates drop, then I feel like the price of houses will go up,” he said.
