The Danger of Waiting to Buy a Home or Condo

Buying a new home can be an exciting time. Yet, many people are hesitant to take the plunge… especially when both the housing market and mortgage rates are trending downward. Some prefer to wait, hoping rates will drop even further. After all, why buy now if rates could be lower six months from now? And why pay today’s prices when holding off might mean securing a similar property for less? That’s the trap that many fall into. 

The Trap of Waiting for Lower Mortgage Rates

Long gone are the days when we could get a fixed rate mortgage in the 1% range as we saw from late 2020 to late 2021. At the time, 5-year fixed rates dropped to as low as 1.24%. Prime rate fell to 2.45%, pushing some variable rates below 1%. I would tell my first time homebuyer clients to enjoy this while they can and that this is not typical. They are getting in when rates are the at their all-time low and they can expect them to be higher when their mortgage renews.  

In late 2021, fixed rates began climbing to over 2% by year-end… and kept climbing. By October 2023, most fixed rates were in the 5.89% to 6.49% range (situationally dependent). 

Fortunately, rates have dropped by more than 2.00% from their October 2023 peak. The Bank of Canada is expected to cut their rate further, which is no big secret. So, if rates are falling, then why not wait just a bit longer before diving into the market? 

Some will say they are waiting for rates to fall further. Or down to a certain point. 

But how much further do people think rates will drop? 

Yes, mortgage rates are expected to all a bit further… But will they get back into the 1% range? It’s safe to say that it’s not going to happen. Remember, it took a pandemic to drive rates down to that point. 

Will they fall into the 2% range? 

Anything can happen, but this may also be a pipedream. It’s not expected. As I’ve been saying for a while, if fixed rates got into the mid-3% range then we’d be doing well. 

Will rates fall lower than this? 

Anything is possible in the financial world. 

But should homebuyers put off their purchasing plans because they want their rate to start with a 2?  They might have better luck waiting for the Easter Bunny. 

And what do you think will happen to the real estate market if rates were to sink back to this level? 

When rates started plummeting in 2020, the average home price in the GTA increased by 13.49% YOY according to the Toronto Real Estate Board (TREB). In 2021, they increased by another 17.84%.  The record low mortgage rates created a feeding frenzy. 

Eventually, mortgage rates will bottom out before they start to rise once again. It will happen. It’s just a matter of when.  Once it’s clear, everyone sitting on the fence waiting for the perfect moment will be jumping back into the housing market, trying to snag that super low mortgage rate while it’s still available. But by this time, it’s too late. 

Even if a lower rate saves you $5,000 in interest over a term, it’s a terrible trade if prices climb $50,000 while you wait. Price inflation can easily dwarf small rate improvements… especially once multiple-offer madness returns.

Should You Wait for Property Values to Fall Before Buying?  

A declining housing market will lead many to sit back and wait for the market to bottom out. But when exactly will that be? Predicting the bottom is like trying to predict the bottom of a stock trend. Even the most brilliant industry experts can’t answer this question. So how are we supposed to know? 

As soon as the bottom of the market becomes obvious, then virtually everyone sitting on the fence will be jumping back in at the same time. All trying to take advantage of the rock bottom real estate prices. And then what happens? It’s 2021 all over again. Bidding wars competing with literally dozens of other offers. People getting desperate and frustrated, continually getting outbid on one offer after another. Meanwhile, prices begin to climb fast as buyer competition continues to intensify. 

That’s the trap of waiting for the market to bottom out. 

If you’re buying at the top of your budget, then quickly rising home prices lead to you having to accept a less desirable property, or getting shut you out of the market all together. 

Economic Uncertainty

Another concern is broader economic uncertainty. With US President Donald Trump’s unpredictability, a single tweet can result in fixed mortgage rate movement. The October 7 meeting between Trump and Carney produced no agreement or even a timeline, though both struck an optimistic tone. Trump said, “We’re going to especially treat Canada fairly” and “The people of Canada will love us again,” while Carney said he was “confident we’ll get the right deal.” It felt like more talk than action. Still, once trade uncertainty lifts, overall economic sentiment should improve, potentially boosting Canadians’ confidence to enter the housing market. Time will tell.

So…When is the Best Time to Buy?

I would suggest getting into the market before the bottom of the market becomes obvious. There are several advantages to this: 

• Fewer competing offers… if any

• A financing condition can generally be included, which gives you a safety net

• More leverage to negotiate a lower price

• Buying a home you love… before rising prices push it out of reac

Fixed mortgage rates have now fallen to as low as 3.69% for an insured 3-year fixed mortgage (as low as 3.89% for uninsured). The lowest 5-year fixed mortgage rates are now in the range of 3.94% to 4.14%... depending on your situation. But will they fall lower? They’ll likely come down a bit… but I wouldn’t expect any radical drops. However, anything can happen in the world of mortgage rates. Major economic shifts, trade wars, or other geopolitical events can have a significant impact on rate forecasts… in either direction.  

Are You Worried About Overpaying? 

Everyone wants the lowest price. Keeping more money in your pocket is the goal, so waiting for both home values and mortgage rates to drop can feel like the “logical” move. But that’s also the crowd’s mindset, which is why activity tends to surge the moment a bottom becomes obvious. The advantage goes to those who position themselves before the rush.

You’re not “overpaying”; you’re paying today’s fair market value. Could prices fall further? They might. Condos, in particular, could see more softness. That’s why your purpose matters. If you’re aiming to flip for a quick profit, waiting may be prudent. If you’re buying a home for you and your family, short-term dips don’t translate into losses unless you sell during the downturn. 

Historically, values recover over time. The key is aligning your decision with your timeline, risk tolerance, and how you plan to use the property.

Final Thoughts

Chasing the perfect rate is how buyers miss the right home. You don’t need a unicorn number to make a smart move… you need a fair price, reasonable competition, and financing that gives you room to act on your dream home when you see it. By the time it feels “safe,” everyone else is also in the same boat, returning to the market in full force. Sellers realize they can get more for the price of the home as buyer competition heats up. Before long, the property you loved has inched out of reach.

The time to act is before all this happens. We just can’t predict when that will be and all we can do is go by the forecasts. But they can always change. 

As always, time will tell.