Being a real estate agent is akin to being a fitness, finance, political anything, etc guru thanks to social media. You can, without much resistance, say whatever, however, you want in order to portray yourself or your agenda in a certain light, shout out to Top Producers in their bio and nod to Mr. Musk for making that en vogue as of late. The biggest dogs of any category are rarely the ones barking, and those claiming are usually all bark no bite. 

This is because, in my opinion and experience, humans, especially us Americans rarely look under the covers. It’s too easy to be appeased at first glance, it’s almost against our mainstream culture to think constructively about something… I’m not going to go too far down a rabbit hole but I do think it is highly applicable to real estate, all that meets the eye is not always true. $700k mansion in Hodunk, USA?! Oh Man, must be nice to live there! (completely disregarding hundreds of reasons you’ve never even contemplated living in Texarkana, Flobama, etc ;). 

While it’s fine to highlight certain numbers to generate interest and awareness, I think the better argument lies below the surface and finally brings me to my point: interest rates & equity. I came upon this post recently by a Bay Area agent, upselling the “Buy Now vs Wait”, based on the argument that – if interest rates drop you’re not getting a great deal because of the equity you will have already accrued by buying early. While on the surface I generally agree with the buy vs wait perspective, it’s only partly because of the X% equity you would have in the first year of ownership, which is a moot point because 99% of buyers are not selling after year one.

Taking her perspective, the 1% interest rate you’d be saving by waiting if (BIG if) interest rates go down would “cost” you $43,584 in “gained” equity, in year one. What isn’t highlighted is that the $305 monthly difference in that 1% rate difference is equal to $109,800 over the course of a 30yr loan. This is where the rate watchers pipe in and make their case for waiting for interest rates to come down. But they are forgetting (which this agent does a great job at highlighting) the fact that homes in California conservatively appreciate 5% YoY (year over year). 

So now we’ve got some real numbers to work off and guess what, it’s not the $43.5k in equity that I personally think is relevant, it’s that there is actually only a $1,216 difference in the two options when you take into account appreciation, higher home price, and 1% rate difference.

• $65k higher home price but $305/month savings = ($109,800 ($305×360) – $65k) = $44,800 in pocket with the better rate difference but factor in the $43,584 in equity you have on the higher rate it comes to just $1,216 savings by “waiting” to purchase same home for more but with a better rate. 
• Factor in the buyer pool which will increase significantly once rates drop and your chances of getting that home gets even smaller, if not more expensive with more buyers that toss in their hat.
• Lastly, add in the $3k-$7k rent you’re likely paying to stay in your current residence waiting for rates to drop, and it’s another $36k-$84k off the top annually while sitting on the sidelines.

The fact that real estate appreciates is the main reason to buy, and the main reason to feel safe in that purchase. “Overpaying” for a property vs sitting on the sidelines only to overpay down the road for a lesser property is the reality every prospective buyer is in. Very rarely do agents encounter buyers who have regret for stretching their initial budget to land the home of their dreams.

Bryce Adams theFrontSteps Real Estate DRE# 02133765 @bryceadamshome 415-497-6153 [email protected]

“Buying or selling a home can bring on both exhilaration and sleepless nights. With a strong understanding of the local market, Bryce is in the best position to help you navigate what can seem like an overwhelming number of options and considerations.“