I’m a Real Estate Agent: Despite High Mortgage Rates, Here’s Why Now Is the Time To Buy

Feverpitched / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

If you’ve been looking to get into home ownership, you’ve likely been intimidated by the higher interest rates. These higher rates have made it more expensive to carry a mortgage, which can lead to financial stress if you’re not in a strong financial position.

However, if you’re still on the sidelines and uncertain about entering the real estate market, we will examine why right now is the best time to buy a property despite the high mortgage rates. Here is what real estate broker Lambros Demos said.

Prices Will Increase in the Next Year

“Right now, most people are fearful of buying real estate due to high interest rates, but these rates are only temporary and there are clear indications that rates will be coming down this year,” Demos said. “When this happens, those buyers sitting on the fence will jump back into the market. And when that happens, home prices will go up due to increased demand.”

All signs seem to point toward interest rates coming down in 2024 after the Fed engaged in an aggressive rate hike campaign in an attempt to cool down the rampant inflation. When the rates drop, you’ll see many potential buyers returning at the same time, which will likely drive housing prices up even further. 

Demos elaborated, “When interest rates go down, home prices go up. Why pay more for the house? You won’t be any further ahead by waiting.”

You Can Negotiate a Better Deal

“You will have less competition, meaning you can negotiate a better deal — not just price but terms such as contingencies and closing date, etc.,” Demos said.

When the real estate market started to take off in 2020, homebuyers didn’t have much leverage and often had to accept whatever terms were offered. There were stories of buyers even forgoing home inspections to close deals. When there are multiple offers on a home, you don’t get much space to negotiate terms that are favorable to you. 

“I’m seeing buyers getting homes at reasonable prices right now, with the seller paying a lot or all of the closing costs — including buying down the rate on a 2-1 temporary buydown, which takes all the rate risk out of the equation for a buyer,” said Mason Whitehead, a branch manager with national lender Churchill Mortgage. “That allows the buyer to get a low rate now and still be able to refinance when rates are projected to drop and lock it in for the entire loan.”

It’s crucial to remember that there’s more to buying a home than just the interest rate you pay on your mortgage loan. You’ll want to work on getting a decent final price with terms that make sense for you. 

You Can Start Building Equity

“Time in the market always beats timing the market,” Demos said. “If you wait until interest rates come down, you are potentially losing out on equity as the value of your property will certainly go up.”

Even though you may spend more on interest, you’ll likely see your equity increase when the property value increases as more buyers return to the real estate market. 

“I would rather see clients in a home, building equity and with the tax advantages of owning a home rather than throwing money away at rent every month in the hopes prices and rates will come down,” Whitehead said. “Up until December 2023, every client who told me they were going to wait for rates and prices to come down in the last three years has ended up paying a higher price with higher rates.

“In December, we got some rate relief, but the clients that waited may have gotten a better rate than they would have the prior six to 12 months, but they also paid thousands of dollars more for the home than they would have if they had purchased sooner and just refinanced.”

The sooner you start building your equity, the better off you’ll be since you won’t have to worry about getting into a bidding way a year down the line. As mentioned by the experts, you can always refinance your mortgage, but you can’t always purchase the same home at the price that you can find right now. 

Rates Will Eventually Come Down

“If you get an adjustable (variable) rate mortgage, you may pay more in the early going; but, as rates come down, your monthly payments will decrease,” Demos said. “Alternatively, you can keep the payments the same and allocate more towards the principal, thus allowing you to pay down your mortgage faster and pay less interest overall.”

The general theme is that many experts expect interest rates to drop in 2024. This means that, if you’re stressed about the high cost of borrowing at the moment, you have to remember that these rates won’t be here permanently. You can also continue working on your credit score by paying down debt and making payments on time to ensure you can land the best possible rate. 

Closing Thoughts

You might not be alone if you’re waiting for interest rates to drop before buying your first home. With so many people waiting for rates to go down, you may be better off trying to get into the market now.

Even though the rates could be lower later in the year, more competition would drive the prices higher. Many real estate experts believe you’re better off buying a place now and refinancing when rates drop. However, you must look at your own circumstances before making an important decision about your housing since you don’t want to put yourself in a stressful situation. 

Share This Article: