The Worst Time to Buy

I was speaking with a new friend, Kelsey, this week who bought her home in 2022 when interest rates were at their historic low. She was relaying her less-than-spectacular purchasing experience to me, and then said, “The worst! It was the worst time to buy!”

I had to laugh a little bit, because when I speak with folks today, they always say, “I wish I had bought in 2022! It was the best time to buy. Those interest rates are never coming back.”

They’re right, of course, it’s not likely we’ll ever see 3% interest rates again (most predictions expect interest rates to reach into the 7s in 2027). However, here’s what Kelsey experienced when she purchased in 2022:

She had to have an offer ready in under 24 hours of the home hitting the market
She waived her inspection contingency, just to get the upper edge
She offered $150,000 over asking
After closing, she discovered a mountain of work that needed to be done on the house, that she hadn’t known about nor anticipated (because she waived her inspections)

In hindsight, she doesn’t love her home. She’s learned that she significantly overpaid for it, has had to spend a lot of money renovating (that she didn’t budget for), and is now faced with holding on to the home much longer than she’d prefer to. Importantly, she told me she doesn’t totally regret buying, but she wishes she’d waited for a slower market.

Competition among buyers in 2022 was so fierce, sellers were absolutely getting away with murder. I’ve heard numerous accounts from people who bought at the time that feel stuck in a house they don’t love, but can’t sell because they’d be taking a loss.

Ironically, I can’t tell you how many times in the last couple months I’ve had folks tell me, “We’re waiting for interest rates to drop.” I totally understand, of course; if your monthly payment could be $1,000 cheaper down the line, why wouldn’t you wait?

Well…because you’ll probably have an experience closer to Kelsey’s. If and when interest rates do drop, typically more buyers enter the market (for the same reason as you). You end up competing against more offers, which usually means higher prices, and you possibly land at a monthly payment that’s about the same (or higher) than what you would’ve paid today today.

The moral of the story is: if you can afford the monthly payment today, waiting for interest rates to drop is playing a losing game. As a whole, in today’s market, you can have a much more pleasant purchasing experience than you would have had in 2022. There’s more inventory and less competition. You have time to weigh your options, carefully craft an offer that you feel comfortable with (potentially even getting in under-asking), do your inspections thoroughly, and end up with a house you’re certain you love.

If you can have the house today, why are you waiting for a time when you’ll have to compete for it?