I’m waiting to buy because I hear there’s a housing crash coming.  I’m waiting to buy because I’m waiting for interest rates to come down.  I’m waiting to buy it because I don’t want to lose my 3% mortgage.  Does this sound like you?  If so, read on… In this installment of “It’s getting interesting”, we are going to offer a few hot takes on the current housing market, interest rates, and what it means for potential buyers.

If you read “Part 1” of this post, you’ll know that we challenged the notion of interest rates being “high”.  Let’s recap: they’re not.  At least not in the historical context.  In fact, I’d call the current rates “nominal” or at least decent.  The issue is that when you combine interest rates with high housing costs, the dollar signs really start to add up.  Could interest rates be better? Yes.  Will they go down at some point? Yes.  Asking if things could be better is a tautology: there is always room for improvement when perfection is a theoretical limit.  Asking if they’ll go down, given a long horizon, is also a probabilistic certainty (heard of Vegas?).

So, what does that mean for us?  The home owners… the real estate investors… and the market enthusiasts?  Well, because we must satisfy the WordPress scrolling algorithm, read to the end of the article, and you’ll find out.  Just kidding! We wouldn’t play you like that.  Here’s the punchline: Buy now if the numbers STILL make sense.  It’s plain and simple.  You’re waiting for that housing crash?  Let me guess… Did you see something on the internet suggesting that there was one coming?  You got lucky in the timing with your last purchase and are one of the fortunate souls with a 3% mortgage and are now sitting on a pile of equity?  Have you ever heard of “golden handcuffs”?  And finally, interest rates will go up, down, or not move (in the short term anyway) and there’s no way around that.  But, I’m here to offer you a sunny perspective on all three outcomes.

So, with this thesis in mind (buy now if, and only if, the money makes sense), let’s talk about interest rates.  Consider this: you buy an investment property for a primary residence with a 6.5% interest rate on it.  Now consider the three possible outcomes.  First, interest rates actually go up! Maybe they skyrocket above 10% like they did in the 80s.  Great! you locked in a low rate! You win! Have some cake.  Now, the second outcome: they stay the same.  Congratulations, you didn’t sit on the sidelines, and are accruing equity through loan paydown, and market appreciation (we have a blog post about appreciating appreciation – go read that if you haven’t).  You win again! Have some more cake.  Lastly (and I saved this for last on purpose because there’s a bit to it), they go down.  You guessed it, you win again! You get to refinance that 6.5% mortgage you got while housing prices were a little squishy due to increased inventory and economic uncertainty (writing this as of March 2025 – if you know, you know). So now you will have the lower interest rate and you won’t have bought when housing prices were at their highest. 

So, if you win in all three situations, what’s to worry?  Again, the numbers have to make sense!  And that means, plainly, don’t buy a house (primary or investment property), if you can’t afford it.  And affording it means the down payment, all the fees, and the moving costs (don’t forget about the importance of a new couch for your new space).  So long as you set yourself up for success, and don’t put yourself behind the eight-ball, my opinion is to do it.  If it’s the right house for you and your family AND the numbers make sense – do it.  If it’s a cash-flow positive investment property, with a good deal, in a decent neighborhood, with good macro and micro economic factors (hmmm we should write a blog about this… stay tuned!), then do it.  In each scenario (interest rates go up, down, or stay the same), you can set yourself up for success so long as you’re honest with yourself and look at the numbers.

But Ken, wait! you say.  What about that housing crash?  That could really put a damper on a refi!  Well that’s why I said don’t put yourself behind the eight-ball if you’re going to make the purchase.  This means you should have the cash reserves or a contingency plan to weather the storm.  And when the storms come, they pass.  So, you have to be prepared to weather a storm. That means being prepared and mentally strong.  This is, again, included in the statement that the numbers have to make sense.  And maybe you had to give up that 3% mortgage to get you and your family in a primary that was the right fit for you.  Don’t kick yourself in this scenario; no one has a crystal ball.  If you did your due diligence, put your family in the right house, and had a contingency plan for disaster, that’s the best any of us can ever do. 

Okay, so, you understand that interest rates are not historically high, they are just relatively high.  But you still feel like housing is just way too expensive, and you still see the idea of investing in real estate as too “risky”.  Hey, it’s your call to make.  But before we sign off, I would encourage you to ask yourself a few things:  Do you think the cost of housing in the United States of America will start trending downward?  Do you think the United States government will stop printing money?  Do you think inflation will go away?  Do you think the United States population is ready for decline?  What do you think happens to inflation hedged assets (those that are scarce in quantity and resources like housing and precious metals) when the dollar can buy less?  Before I leave you with onelast question, consider this quote from the Oracle of Omaha: “Be fearful when others are greedy and greedy when others are fearful”.  So, with that in mind, along with “high” interest rates and economic uncertainty, do others seem “fearful” or “greedy” right now?