Is This Season a Good Time to Buy Despite High Interest?

High Interest Rates, Lower Competition: Why This Season Could Be a Great Time to Buy

If you’ve been thinking about buying a home but keep telling yourself, “I’m just going to wait until interest rates come back down,” you’re definitely not alone.High interest rates have discouraged a lot of buyers from entering the market. And honestly, I understand why. The monthly payment matters, and if the numbers don’t make sense for your family, you should never feel pressured to buy a home simply because someone tells you it’s “the right time.”But there’s something I think buyers should consider before completely walking away from their home goals:Higher interest rates can also create opportunities.When rates are high, fewer buyers are willing to compete. That can mean less competition, more negotiating power, and sellers and builders who are more willing to offer incentives to get a deal done.And if you’re a buyer who is financially ready and seriously interested in purchasing, this is the season to pay attention.

Sellers Are Offering More Than Just a Price Reduction

On the resale side, buyers often assume the only way to get a better deal is to negotiate the purchase price.But there are other strategies worth discussing with your real estate agent.One example is a temporary rate buydown, such as a 2-1 buydown or 3-2-1 buydown, where seller concessions can potentially be used to help cover the cost.Depending on the transaction and loan program, a seller may be willing to provide credits that can help cover some—or potentially most—of the cost of a temporary rate buydown and/or closing costs.That means instead of simply asking:“Will the seller lower the price?”You may also want to ask:“Would the seller be willing to contribute toward my closing costs or rate buydown?”Those conversations can make a meaningful difference in your upfront costs and monthly payment.

New Construction Is a Whole Different Conversation

This is where things get especially interesting.Builders are competing for buyers too, and many are offering incentives to help make their homes more attractive in a higher-rate environment.For example, some builders are offering promotional financing, including temporary or adjustable-rate options. We've recently seen builders advertise rates as low as 3.99% for the first five years through a 5/1 ARM.With a 5/1 ARM, the initial interest rate is fixed for the first five years, after which the rate can adjust according to the terms of the loan.That doesn't mean you should automatically choose an ARM.It means you should understand the numbers and your options.If you purchase today and rates improve significantly a few years from now, you may have the option to refinance—assuming you qualify and the economics make sense at that time.And builders aren't only offering financing incentives.Some are offering flex credits ranging from $15,000 to as much as 6% of the purchase price.That money can potentially be used toward things like:

Buying down your interest rate
Closing costs
A combination of both
Other eligible loan and transaction costs

In some situations, you may even be able to structure the credit so that a portion goes toward a rate buydown and the remainder helps cover closing costs.The important part?Don't assume you know what you can or can't do with the incentive. Ask. Run the numbers. Explore the options.

This Is Why I Keep Saying: Don't Automatically Wait for Rates to Drop

Here's the thing about waiting for interest rates to come down:You aren't the only person waiting.If rates suddenly drop significantly, the buyers who have been sitting on the sidelines may all decide it's time to jump back into the market.And what happens when more buyers enter the market at the same time?Competition can increase.You could potentially find yourself competing against multiple buyers, offering over asking, competing for seller attention, and losing some of the negotiating power that exists today.Meanwhile, the home you wanted may also become more expensive.I'm not saying that will happen tomorrow. And I'm certainly not saying anyone should buy a home they can't comfortably afford.I'm saying that waiting for the perfect interest rate isn't necessarily the same thing as getting the best overall deal.

And Yes, I'm a real estate agent… But I’m Also Living This With You

I already know what some people are thinking:"Of course you're saying this. You're a real estate agent."Honestly, I find that one kind of hilarious. 😂Because we didn't just tell our clients to navigate this market—we did it ourselves.My husband and I purchased our forever home last year when interest rates were around 7.5%.Would I have loved to have the 3% interest rate we had on our very first home?Absolutely.But we had a goal.We wanted our forever home, and we decided that waiting indefinitely for the “perfect” interest rate wasn't worth putting our plans on hold.The builder we purchased from offered us $15,000 in seller credits, which we used toward our closing costs.Then, several months after moving into our home, we saw an opportunity when rates dipped, and we were able to refinance from around 7.5% down to approximately 6.5%.Was it perfect? No.Was it the lowest possible rate? Definitely not.But we made a decision based on what made sense for our family at that time—and we are now living in the home we plan to stay in.I'm not telling you this because I'm a real estate agent. I'm telling you this because I'm in the market with you.

Q4 Can Be an Opportunity

Historically, the fourth quarter can be an interesting time for buyers because sellers and builders may be especially motivated to move homes before the end of the year.Add higher interest rates and reduced buyer demand to the mix, and you may have an environment where buyers have more room to negotiate than they would during a highly competitive market.This doesn't mean every home is a deal.It doesn't mean every seller will give you a credit.And it definitely doesn't mean every builder incentive is automatically a good deal.It means you should actually look.If you're financially ready to buy, this may be one of those seasons where doing your homework could pay off.

Don't Do It Alone

This is where having the right real estate agent really matters.Don't just ask your real estate agent, “What are interest rates today?”Ask them:“What incentives are available?”“What are sellers willing to negotiate?”“Could we structure a rate buydown?”“Would a seller credit make more sense than a price reduction?”“What are the builders offering right now?”“What would my payment look like under each scenario?”And most importantly:“Does this actually make sense for me financially?”Because at the end of the day, if the payment is too high for your budget, that's a completely valid reason to wait.Your real estate agents job isn't to convince you to buy a house.It's to help you understand your options, run the numbers, negotiate strategically, and determine whether the opportunity actually makes sense for you.So if buying a home is one of your goals, don't automatically walk away just because interest rates are higher than they were a few years ago.Do the math. Explore the incentives. Understand the market. And then make the decision that's right for your family.Because sometimes the best opportunity isn't when everything is perfect.Sometimes it's when there is less competition and more room to negotiate.And if you're serious about buying, Q4 might just be a season worth paying attention to.

Christina P Reyes Changco Real Estate Agent Area served: Elk Grove, Roseville, Sacramento, Concord, CA, San Jose, CA Expertise: House Hacking, Employer Relationships, Downsizing, New Construction, Investor Clients