Why Now Might Be the Best Time to Buy

I know how that headline sounds. Rates are at 7.40%, the Fed just raised its benchmark rate in September for the first time since 2023, and inflation ticked back up to 3.7% last month. On paper, this is the moment every buyer is told to sit on the sidelines and wait for rates to come down.

So here's my question. What do you think happens to home prices when they do?

Lower rates bring a lot more buyers

This isn't a guess, it's been measured. The National Association of Realtors estimates that if the 30-year rate drops to 6%, about 5.5 million more households would be able to afford a median-priced home, and 1.6 million of those are renters (the exact people who are waiting on the sidelines right now). NAR expects about 10% of them, roughly 550,000 households, would actually buy within 12 to 18 months.

The National Association of Home Builders breaks it down even further. They found that every quarter-point drop in rates "prices in" somewhere between 1 million and 1.4 million additional households, depending on where rates start. The lower rates go, the more people each quarter-point cut unlocks.

So, if rates drift from today's 7.40% back down to the low 6's (call it 6.25%), that's four or five quarter-point drops. Using NAHB's math, that's roughly 4 to 6 million more households who suddenly qualify to buy.

And here's the problem. The number of houses for sale doesn't go up just because rates went down. About half of all mortgaged homeowners still have a rate under 4%, so they aren't in a hurry to list. More buyers chasing the same number of homes only goes one direction.

So what does that do to a $500K house?

Let's put real numbers on it. Say you're looking at a $500,000 home today with 10% down. At 7.40%, your principal and interest is about $3,116 a month.

When rates hit 6.25%, a buyer with that exact same $3,116 monthly budget can suddenly afford a house priced around $562,000. That's 12.5% more buying power, overnight! Not every buyer is going to stretch to the max, but that extra buying power doesn't just disappear, it shows up in offers, competing bids, and fewer price reductions.

For context, NAR's chief economist projected about 4% national price growth with rates near 6%, and some analysts estimate 6% to 7% if rates fall further. My own estimate is that if that $500K house goes up 6% to 8% by the time rates are back in the low 6's (well short of that 12.5% in extra buying power), you're looking at a price tag of roughly $530,000 to $540,000.

If you buy now and rates do come down, you have the option to refinance (closing costs apply, and nobody can promise rates will fall). If you wait, you can't go back and buy the house at last year's price.

But what if prices drop first?

That's a fair question, and I'm not going to wave it away. Portland's median sale price was about $518,000 in September, down 2.2% from a year ago, according to Redfin. With rates where they are, it's entirely possible prices soften a little more in the near term. I'd be lying if I said otherwise.

That being said, here are three things I'd want you to think about.

First, home values have never gone up in a straight line. Portland has had flat years and down years (2008 through 2011 were rough), and yet values have still more than tripled since 2000. If you zoom in on any one year, it can look scary. If you zoom out over 10 or 20, the trend is pretty clear.

Second, trying to pick the exact bottom almost never works. The people who build the most wealth in real estate aren't the ones who timed it perfectly, they're the ones who bought a home they could afford and then stayed in it for a long time. Every year you spend waiting for the perfect moment is a year you're paying rent and not building equity.

Third, a dip on paper isn't a loss in your pocket. If your home's value drops 3% next year but you're living in it, making your payments, and not planning to sell, you haven't lost anything. You've just got a lower number on Zillow. The only time that dip turns into real money is if you're forced to sell during it, which is why I always tell buyers to make sure they can comfortably afford the payment and plan to stay at least 5 to 7 years.

Bottom line

Waiting for lower rates means you'll be shopping alongside millions of other people who were waiting too. Buying now means you're shopping while most of them are on the sidelines, with more negotiating room and less competition, and you can revisit the rate later if the market cooperates.

This isn't the right move for everyone. If your job is uncertain, or the payment would stretch you too thin, waiting is the smart call. But if you're financially ready and planning to stay put, it's worth sitting down and running your numbers. I'm always happy to do that with you.

Example is for illustration only and is not a loan quote. Payments show principal and interest only on a 30-year fixed loan with 10% down and do not include taxes, insurance, or mortgage insurance. Future home prices and rates are not guaranteed. Refinancing involves closing costs and is subject to qualification at that time.