Think 7% interest rates are killing the housing market? Think again—You want interest rates to stay in the 7% range–Trust me!  Here’s why they’re actually your best friend right now. Yes --YOU-- Your Best Friend.

Here's the deal, 7% interest rates are the best thing if you are considering a move—whether you're trading up to a bigger home, downsizing, or buying your first home. Here’s why.

The 7% rates—are actually keeping prices down. That’s a good thing for buyers overall because you can never change the total amount you pay for a place. Right now, those 7% rates are keeping a lot of buyers on the sidelines.

The National Association of Realtors finds that for every 1% decline in mortgage rates, 5 million more buyers enter the market—you don’t want that competition pushing prices up.

The Move-Up Buyer’s Secret Weapon: Equity.

If you’re a homeowner considering a move, your biggest advantage is equity. Not only have you been saving for a down payment, but you also have equity from appreciation over the last few years plus your initial principal paydown.

For example, if you bought your home for $800,000 a few years ago in 2021, let’s say it’s worth $1,000,000 now for the sake of easy math. That’s $200K in appreciation. But don’t forget, you had a down payment in there as well—let’s say 10%, which is $80K. Plus, you’ve been making payments over the last few years, paying down principal and stacking even more equity in your favor (around $50,000).

So, if you plan on selling to buy your next place, that’s:

• Your general savings outside of equity: ~$50,000

• Equity since purchase: ~$200,000

• Initial down payment: ~$80,000

• Additional equity from principal paydown: ~$50,000

That gives you about $380,000 to work with as your down payment when you sell—nearly $400K in buying power to move up without stretching your finances.

How You Can Win Right Now:

Move-up buyers who need to sell before they can buy are using some of their down payment to buy down their mortgage rate—allowing them to move into a home that better suits their lifestyle while also lowering their monthly payment.

Why Waiting for Rates to Fall Is the Worst Strategy:

Waiting for rates to fall might seem like a smart move, but it’s probably the worst strategy. Again, the best thing that could happen to you is a 7% rate. You don’t want more people to jump into the market, pushing prices up even higher and driving more competition.

If you buy a $2,000,000 property with 10% down, that’s a $200,000 investment (which you already have from your equity). Then, over the following year, that property appreciates by 5% (less than what’s currently happening). That’s $100,000 of appreciation, or a 50% return on your investment.

You would be hard-pressed to get a 50% return in the stock market. Then use some of your equity to buy down your mortgage rate to make the monthly payments a bit easier. It's the go-to strategy for people right now who need a place that better suits them.

The median sale price of a home in Seattle was $999,950 last month, up 11.2% since last year (for detached single-family homes). So even in what a lot of people feel is the worst market we've had in years, home prices are still appreciating.

Lessons from History: The Risk of Waiting:

If the so-called “experts” are right, we might see rates settle in the mid-6% range by year-end. But they could just as easily be wrong. Predicting the future is a fool’s errand.

In 1971, mortgage rates were 7.33%. If you waited for rates to drop before buying, you would have waited 22 years until 1993.

For those who bought in 1999, when rates were around 7.5%, their home values tripled in just six years. But if they moved up in 2004 at a 4% rate, they might have seen their home values cut in half in the 2008 crash.

However, those who held onto their homes saw their values skyrocket over time. The lesson? No one can predict the future, but history shows that owning real estate long-term is a winning strategy.

The Story for Move-Up Buyers:

Move-up buyers, your time is now. You have the equity, and you can use it strategically to buy a better home that better fits your lifestyle with smart financing moves.

First-Time Buyers: Get Your Foot in the Game:

If you’re a first-time buyer, the key is simple—you need to get in the game. Prices will only continue to rise, and waiting for rates to drop will only put you in a more competitive market. Give yourself the opportunity for a stepping-stone home and let appreciation do its magic. Then, you can trade up in the future. Owning a home is like partnering with another income earner that works for you—day and night.

For Sellers: Low Inventory Is Your Friend:

If you’re selling a home, there’s a lack of inventory, meaning your home will do well as long as it presents well. Premium homes are still commanding premium prices.

Moral of the Story and Bottom Line:

7% rates are an opportunity, not a roadblock. Whether you’re buying your first home, moving up, or selling, the market still offers plenty of opportunities—if you play your cards right.

If you have questions about what you’re hearing or reading about the housing market, connect with a real estate agent. You deserve to have someone you can trust to give you the facts and guide you through the process.

Let’s Create a Plan That Works for You:

Let’s chat about how to turn today’s market challenges into your financial advantage. Whether you're upgrading, buying for the first time, or selling, we’ll make sure you’re making the smartest move possible.

Best,

Justin H Gazabat
Broker | PNW, Seattle, Ballard, East Side
www.JustinGazabat.com
206-424-9497

PS: If anyone in your social or work circles considering a move, just send Me an intro text or email with their best contact info, make sure everyone is CC’d and I’ll take care of the rest! I promise to take great care of them, serve them well, make you look good, plus help them get great results.