For the past couple of years, many buyers have been sitting on the sidelines, waiting for the perfect moment when mortgage rates finally drop. The idea makes sense in theory: lower rates mean smaller monthly payments.

But here’s the reality: waiting for rates to drop could actually cost you more in the long run.

Let’s break down why.

1. Lower Rates = Higher Prices

When mortgage rates drop, demand spikes. Every buyer who’s been waiting jumps back into the market at the same time, and that drives prices up.

Think back to the 2020–2021 market: rates hit record lows, and home prices skyrocketed almost overnight. Multiple offers, bidding wars, and homes selling way over asking became the norm.

If rates fall again in 2026, expect a repeat of that frenzy. Yes, you might save on interest, but you’ll probably pay more for the home itself.

2. You’ll Be Competing With Everyone Else

Right now, buyers who act have an advantage: less competition. Sellers are more open to negotiations, and you might even get closing cost credits or price adjustments.

Once rates drop, all that leverage disappears. You’ll be competing with:

• Other first-time buyers

• Upgraders and downsizers

• Cash investors and flippers

When demand surges, sellers call the shots, not buyers.

3. Equity Growth Starts the Day You Buy

Every month you wait is a month of missed equity growth.

Even in a slower market, home values in California tend to trend upward over time. Getting in now means you’re building wealth while others are still waiting for “perfect conditions.”

And if rates do drop later? Great, you can refinance and enjoy a lower payment while keeping the equity you’ve already earned.

4. Sellers Aren’t in a Position to Slash Prices

Many homeowners bought or refinanced at those ultra-low pandemic rates — meaning they owe near the top market value. They’re not going to sell for less than what they owe, even if the market slows a bit.

That’s why prices have remained stubbornly high despite higher interest rates.

Even in foreclosure situations, investors are lined up with cash to grab discounted homes before traditional buyers can blink. So if you’re waiting for a price crash, you might be waiting forever.

5. The “Perfect Time” Doesn’t Exist

No one can perfectly time the real estate market — not agents, not investors, not economists.

The smart play isn’t to wait for rates; it’s to buy when:
✅ You can afford the payment
✅ You find the right home
✅ You plan to stay long enough to build equity

Remember: you can always refinance the rate — but you can’t go back and buy yesterday’s price.