Is Buying Real Estate Still a Smart Move if the FED Doesn’t Drop Rates?

Was it still smart to buy real estate even if the FED doesn’t drop rates?

I’ve seen some memes online this week poking fun at real estate agents that said “Date the rate and marry the property” last year. The joke is that the agents were wrong and it was some kind of angle shot to get people to make a bad financial decision and buy regardless of the interest rate they were getting on their loan.

I said a version of this message on the Ron & Don Radio podcast and online – I decided to do the math and see if I gave bad advice.

I’m going to use averages in these calculations and I realize that not every transaction is the same.

Let’s do a by the book transaction in June 2023 in King County.

The median sale price of a residential property was $933,750 and the interest rate was 6.71%.

So that deal traditionally would look like this:

Sale Price $933,750

Down Payment 20% $186,750

Principal & Insurance per month $4,825

(30 year fixed at 6.71%)

At the time, the FED was signaling 4 rate drops in 2024. So let’s see what the monthly payment would be assuming that you would have zero fees to refinance (which is not true, but let’s do that math that way for simplicity.)

Principal & Interest per month $4,340

(30 year fixed at 5.71%)

So a monthly savings of $485 or $5820 per year.

Over that same year, the median price of that same property in King County went up by 11.8% to $1,022,498 or an increase in value of $88,748 or $7395.66 a month.

The percentage jump for condos in King County was even bigger at 16.2%.

I do acknowledge that these are only averages. I also am aware that the mortgage payment is real dollars you have to spend every month and the equity value is locked in the property. You can’t buy gas and groceries with that equity. 

However, we always talk about building long term wealth in real estate, and this is how it is done. In the Pacific Northwest, the house is growing in value at a pace that makes up for the interest rate.

I stand by what I said before – it’s a smart financial move to own real estate in the PNW.

If you want to start your real estate journey – reach out!


Ron has been a part of just about every kind of real estate transaction you can think of. He understands that finding the perfect place for you and your family is crucial. Schedule Your Sit Don with Ron today!

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DISCLAIMER: Ron Upshaw, Managing Broker License #22027577 & Don O’Neill, Broker License #95294 are brokers with Kelly Right Real Estate

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