Should You Wait to Buy a Home? 23 Years of Data

Should you buy a home now, or wait for mortgage rates to come down?

It’s one of the most common questions we hear from Oklahoma City-area buyers. And it’s a reasonable one.

Nobody wants to buy a home and then watch mortgage rates fall six months later. On the other hand, waiting has a cost, too. Home prices can change. The house you want may sell. And even if rates come down, the overall math may not improve as much as you expected.

A recent study gives us an interesting way to look at that decision.

AD Mortgage analyzed 23 years of housing data, comparing what actually happened when someone bought a home in a particular year versus waiting two years. Nationwide, buying immediately produced the lower purchase and financing cost in 61% of the historical scenarios studied.

But the Oklahoma number is even more useful for buyers here.

In Oklahoma, buying immediately came out ahead 52% of the time.

That’s much closer to a coin toss—and I think that’s the more important lesson.

There hasn’t been one strategy that works all the time.

What the Study Actually Compared

AD Mortgage looked at every state plus Washington, D.C., using available data from 2000 through 2022.

For each year, researchers compared two choices: buy a home that year or wait two years and buy under the market conditions that actually existed at that later date.

The calculation included the average home price, a 15% down payment, the monthly mortgage payment based on the average 30-year fixed rate, and—for the buyer who waited—two additional years of savings equal to 10% of median household income per year.

The lower total purchase and financing cost was considered the better outcome.

Nationwide, buying immediately won 61% of those comparisons. But results varied substantially by location. Buying immediately won 74% of the time in California and Florida, for example, while it won only 39% of the time in West Virginia.

Oklahoma landed at 52%.

That variation is a good reminder that national housing headlines don’t necessarily tell you what you need to know about buying a home in Oklahoma City, Edmond, Deer Creek or the surrounding communities.

A Lower Mortgage Rate Doesn’t Automatically Mean a Better Deal

Mortgage rates naturally get most of the attention.

If today’s rate feels high, waiting for a lower one seems logical. But the rate is only one part of what determines what a home ultimately costs you.

The study gives a good example.

The average 30-year mortgage rate dropped from 3.98% in 2013 to 3.85% in 2015. Someone looking only at interest rates might assume the buyer who waited until 2015 came out ahead.

Instead, buying in 2013 produced the better outcome in 84% of the state scenarios analyzed.

Why?

Because the buyer wasn’t waiting in a vacuum. Home prices were changing at the same time.

That is something we regularly discuss with Oklahoma City buyers. A lower future mortgage rate can help your monthly payment, but it doesn’t tell you what the house will cost when that lower rate arrives.

And there is another possibility buyers sometimes overlook: if rates fall, more buyers may decide it’s finally time to enter the market. Depending on inventory at that point, you could be trading today’s interest-rate challenge for more competition.

None of us knows which combination we’ll get.

There Were Definitely Times When Waiting Worked

This study shouldn’t be interpreted as evidence that buying sooner is always better.

It isn’t.

From 2007 through 2010, buying immediately failed to produce the better financial outcome in any of the state scenarios analyzed. Waiting was the better result throughout that period.

Then the pattern changed.

Buying immediately won in 92% of scenarios in 2015, 100% in 2016 and 96% in 2017. In 2018, that number abruptly dropped to just 2%. By 2020, 2021 and 2022, buying immediately again produced the better outcome in 100% of the state scenarios.

Those swings are worth paying attention to.

They show how difficult it is to identify the “perfect” buying window while you’re actually living through it.

Looking backward, the good and bad times to buy can seem obvious. They weren’t necessarily obvious at the time.

What This Means for Oklahoma City Buyers

If buying now historically won 52% of the time in Oklahoma, I wouldn’t use this study to tell someone, “You need to buy now.”

I’d use it to make a different point:

Don’t base a major housing decision on a prediction that has to come true for your plan to work.

If you’re waiting because you need another year to build your savings, improve your credit, reduce debt or get comfortable with the monthly payment, waiting may make perfect sense.

If you’re planning a move because your current home no longer works, you’re relocating, your household is changing or you’ve found a home that fits both your needs and your budget, waiting solely because someone predicts lower rates next year is a different decision.

Heather and I would rather help a buyer work through the numbers they actually know today than build a purchase strategy around a market nobody can know in advance.

The Study Has Important Limitations

There is one other reason not to turn that 61% figure into a simple “buy now” rule.

The study deliberately left several major costs and benefits out of its calculation. It did not include home equity, appreciation after purchase, property taxes, homeowners insurance, maintenance, HOA fees, rent paid while waiting, investment returns or tax benefits.

In other words, this isn’t a complete rent-versus-buy analysis or a prediction of what will happen next.

It’s a historical experiment designed to answer a narrower question: did waiting two years for different prices and mortgage rates generally produce a better purchase and financing outcome?

Sometimes it did.

More often nationwide, it didn’t.

In Oklahoma, the results were much more evenly divided.

A Better Question Than “Is Now a Good Time to Buy?”

After working with Oklahoma City-area buyers through very different housing and interest-rate cycles, I think there’s a more useful question:

Does buying the right home make financial and practical sense for you today?

Look at the payment. Look at your cash reserves after closing. Consider how long you expect to own the home. Think about your job, family and plans for the next several years.

Then decide whether the numbers leave you comfortable enough to move forward.

Mortgage rates will change. Home prices will change. The Oklahoma City real estate market will change.

Your decision doesn’t have to depend on correctly predicting any of them.

If you’re considering a home purchase in Oklahoma City, Edmond or the surrounding area, we’re always happy to help you look at the choices in front of you and talk through the tradeoffs. Sometimes the right answer is to buy. Sometimes it’s to wait.

The important part is knowing why you’re making that decision.

This article is for general informational purposes and is not financial, tax or lending advice. Mortgage options and individual circumstances vary. Consult a qualified lender or financial professional regarding your specific situation.