Why Now is the Best Time to Buy a Home

Tackling Mortgage Rate Misconceptions

People aren't looking at the data. They fixate on comparing today's 6% mortgage rates to 2021's historic lows without realizing interest rates were much higher in the '80s. The flip side? Home prices are MUCH higher now.

The best time to buy is NOW. There are only two scenarios that will play out: either rates go up or they go down. If they go up, buyers may price themselves out of the market completely. If rates go down, they can always refinance. You can never change the purchase price of your home, but you CAN always change your interest rate.

Instead of obsessing over rates, smart buyers focus on monthly payment. Many markets, including San Antonio, Texas, are buyer-friendly at the moment. Buyers can leverage this advantage by having their realtors negotiate for a rate buydown by the seller.

Strategic Buydowns Can Make Higher Rates Manageable

There are multiple ways to deploy the buydown strategy. Sellers can offer it as an incentive to help their homes sell, and buyers can utilize this for a lower monthly payment. Both temporary and permanent rate buydown options exist.

For example, a seller might agree to pay 2 points (2% of the loan) to buy down the buyer's rate by 1% for the first year. If the rate was normally 6.5% on a $250,000 loan, the principal and interest payment would be $1,580.17. With a buydown to 5.5%, the payment drops to $1,419.47 for that first year. This is particularly beneficial for buyers expecting an income increase or those wanting to save money overall.

Beyond buydowns, seller concessions are gaining traction, with sellers helping to pay some of the buyer's closing costs. These strategies make today's rates much more manageable than they initially appear.

The Reality Check Buyers Need

Potential homebuyers need to get a grasp on reality. The sub-3% rates were at a HISTORICAL low. It MAY never happen again. Are they willing to risk never owning a home while chasing that unicorn rate?

I explain to hesitant clients that renting a home is essentially paying 100% interest. You get nothing back. When comparing markets across the country, we see a clear correlation: when rates go down, home prices go up. Many markets still favor sellers despite higher rates.

Trying to time the market is a fool's errand. The housing market follows the 10-year treasury yield. If Ivy League economists can't even time the market, what makes the average buyer think they can?

The True Cost of Waiting

APPRECIATION is what buyers need to understand. Showing them the cost of not buying now is eye-opening. When you buy, you're gaining equity, think of it as a piggy bank. Waiting a year means the home price will likely increase, and they'll have thrown money out the window paying down someone else's mortgage.

Today's buyers are more conservative and conscious compared to the 2021 frenzy. It's important to note that many people OVERPAID for their homes when interest rates were at all-time lows, and now they're stuck, some even in negative equity situations. When interest rates are low, competition becomes fierce, and many end up as emotional spenders who overpay.

The current environment actually creates opportunity for level-headed buyers who understand that the total cost of homeownership goes far beyond the interest rate. Those who recognize this reality will build wealth while others remain paralyzed by rate anxiety.