**Why Waiting for Interest Rates to Drop Could Cost You More in Real Estate: Buy Now or Regret Later**

In today's real estate market, many potential buyers find themselves in a dilemma: should they buy now, despite the higher interest rates, or wait in the hopes that rates will drop in the near future? On the surface, waiting for a lower mortgage rate might seem like the smart choice, but in reality, it could cost you more in the long run. Here’s why buying now, rather than waiting, is often the better strategy—especially in a competitive market like British Columbia (BC).

### **1. The Myth of Timing the Market**

One of the most common mistakes buyers make is trying to "time the market." This refers to waiting for the perfect moment when housing prices are low and interest rates drop to make a purchase. While this may sound ideal in theory, the truth is that no one can predict the exact direction of the market with certainty. Interest rates, housing prices, and market conditions fluctuate based on numerous factors—many of which are outside the control of buyers, such as economic policy, inflation, and global events.

#### **Current Interest Rate Trends in BC**

As of 2024, interest rates in Canada have risen to combat inflation, following several years of historically low rates. While some experts predict that rates may eventually come down, waiting for that perfect dip could take months or even years. Meanwhile, the real estate market is dynamic, and the longer you wait, the more likely you are to miss out on the ideal property for your needs.

### **2. Rising Home Prices: The Hidden Cost of Waiting**

While potential buyers are fixated on mortgage interest rates, they often overlook the impact of rising home prices. In BC, real estate prices, especially in major urban centers like Vancouver, Victoria, and Kelowna, have historically trended upward. Even if interest rates were to decrease slightly, any savings you might gain could easily be outweighed by the rise in property prices during the waiting period.

#### **Case in Point: Vancouver's Housing Market**

Vancouver is a prime example of how waiting can backfire. Over the past few decades, Vancouver’s real estate market has consistently been one of the most expensive in the country. Even when mortgage rates were low, housing prices continued to climb due to strong demand and limited supply. Buyers who waited for a market "cool-down" in the hopes of lower rates have often ended up paying more for homes as prices continued to rise.

For example, let’s say you’re interested in purchasing a condo in Vancouver worth $800,000. If prices increase by just 5% over the next year—a conservative estimate based on historical trends—you’re looking at paying an extra $40,000 by waiting. Even if interest rates drop by 1% in the meantime, that potential savings is unlikely to offset the increase in the property’s price.

### **3. Inventory and Competition in the Market**

Another crucial factor that many buyers overlook when waiting for rates to drop is the supply of homes available. The current real estate market in BC, particularly in high-demand areas, is characterized by limited inventory. The lack of available housing stock means that buyers are already facing stiff competition for homes, especially in desirable neighborhoods.

#### **Low Supply, High Demand**

Waiting for lower interest rates may only increase competition, as more buyers jump back into the market when rates finally do drop. With more people bidding on the same limited number of homes, bidding wars become more likely, driving up property prices even further. The resulting scenario means you could end up paying more for the same property that is available now, simply because there are more interested buyers.

#### **Limited Inventory Equals Less Choice**

Moreover, as demand surges, the supply of quality homes shrinks. Even if prices do remain relatively stable while you wait for rates to drop, the type of property you're looking for could be harder to find. The longer you wait, the more you may have to compromise on key factors like location, square footage, or amenities, simply because the options available have dwindled.

### **4. Building Equity Now vs. Waiting**

Real estate is one of the few investments that allow you to build equity over time. When you purchase a home, every mortgage payment you make increases your ownership stake in the property. Over time, this equity can grow significantly, providing you with long-term financial benefits.

#### **The Power of Starting Early**

By waiting for interest rates to drop, you delay the opportunity to start building that equity. While you wait, home prices are likely to increase, and your potential equity shrinks. Additionally, if you rent while waiting to buy, you're essentially paying someone else's mortgage rather than building your own wealth.

For example, if you purchase a $700,000 home today with a 6% interest rate, your monthly mortgage payments will be higher than they would be with a 5% rate. However, you’ll also begin building equity immediately, benefiting from future property appreciation. Even if rates drop in the future, you always have the option to refinance your mortgage to take advantage of lower rates.

#### **Equity Growth and Appreciation**

Real estate in BC, particularly in major markets like Vancouver and Victoria, has a strong history of appreciation. By purchasing now, you can start benefiting from this upward trend, rather than missing out on potential gains. Remember, real estate is a long-term investment, and short-term fluctuations in interest rates shouldn’t be the deciding factor in your buying decision.

### **5. Refinancing Options**

If you are still hesitant about purchasing a home due to higher interest rates, keep in mind that refinancing is always an option down the road. When interest rates eventually fall, you can refinance your mortgage to take advantage of the lower rates, potentially reducing your monthly payments. This allows you to lock in your property purchase now, while still benefiting from future rate reductions.

#### **Flexibility in Refinancing**

Many homeowners choose to refinance when rates drop, and this strategy can be a smart way to save money over the life of your mortgage. However, refinancing isn’t possible if you don’t own a home. Waiting for rates to drop means you risk paying more for the property and missing out on future refinancing opportunities.

### **Conclusion: Buy Now to Maximize Your Investment**

In BC’s competitive and fast-paced real estate market, waiting for the perfect interest rate drop is rarely a winning strategy. While higher rates may be a deterrent, they are only one piece of the puzzle. Rising home prices, shrinking inventory, and the missed opportunity to build equity are all important considerations that make buying now the smarter choice for many buyers.

Remember, real estate is a long-term investment, and short-term fluctuations in interest rates shouldn’t prevent you from securing your dream home. By purchasing now, you not only lock in today’s prices but also gain the opportunity to build equity and take advantage of future market appreciation. While you can always refinance later, you can’t go back in time to purchase at today’s prices. Don’t let the fear of higher interest rates hold you back from making one of the most important investments of your life—buy now, and let your property work for you.