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John Adams: Lower rates does not mean cheaper houses
As the calendar turns to 2026, many would-be homebuyers are watching interest rates closely, hoping a new year will bring lower borrowing costs and finally make homeownership more affordable.
ATLANTA - As the calendar turns to 2026, many would-be homebuyers are watching interest rates closely, hoping a new year will bring lower borrowing costs and finally make homeownership more affordable.
To break down what the year ahead could mean, FOX 5 Atlanta spoke with its real estate expert, John Adams, who cautioned that waiting for the "perfect" rate may not deliver the savings buyers expect.
Q: John, what does the New Year hold for hopeful homebuyers?
A: I’m here to give you a reality check that might be hard to hear: A cheaper loan does not necessarily mean a cheaper house. In fact, if you wait for the "perfect" rate, you might find yourself priced out of the neighborhood entirely.
Let’s look at why, starting with what I call the
1. "Demand Tsunami."
Right now, we have millions of young buyers - Millennials and Gen Z - who are financially ready but emotionally exhausted. They are waiting for one thing: a rate starting with a "5."
But here’s the problem: The second rates hit 5.5% or 5%, that "Tsunami" hits the market all at once. When ten people are fighting for the same house instead of two, the price goes up. History shows us that home prices often rise faster than the money you save on interest.
You might save $200 a month on your mortgage, but if the house price jumps $50,000 because of a bidding war, you haven't actually won. You’ve just traded a high interest rate for a high principal.
And then there’s the other side of the equation:
2. The Inventory Standoff. For the market to work, people have to sell. But right now, we have a generation of retirees and homeowners sitting on 3% or 3.5% mortgages from a few years ago. They look at the market and realize that even if they "downsize," their new monthly payment could actually be higher than what they pay now.
Why would a retiree move out of a paid-off or low-interest home into a smaller one that costs more per month? Without a reason for them to move, the supply stays frozen.
Yes, a rate drop helps the buyer, but it doesn't magically create new houses for those buyers to move into.
This brings us to a phrase you’ve probably heard me use:
3. "Marry the House, Date the Rate."
It sounds like a cheesy sales pitch, but there is a hard truth behind it. If you find a house you love today, and you can afford the payment today, you have a massive advantage: you have less competition. You aren't fighting fifty other people in the front yard.
You can "marry" that house at today's price. If rates drop in a year or two, you "date" the rate. In other words, you refinance and lower your payment.
Waiting for lower prices is almost always a "fool’s game." There is no data, none, that suggests demand is going to disappear or that supply is suddenly going to double.
Waiting for the "crash" or the "perfect rate" usually just leads to another year of paying 100% interest to a landlord.
4. Housing Reforms on the horizon?
Finally, we have to talk about the headlines coming out of Washington. The Trump administration has promised "major housing reforms" to make things affordable. They’re talking about cutting red tape and opening up federal land. It sounds promising, but as we always say in this business: The devil is in the details. We haven't seen those details yet. Building a house takes months. Policy changes take even longer to hit the ground. You can't live in a "proposed reform." You have to live in a house.
The Bottom Line
Homeownership is the best investment most Americans will ever make, but it’s not a game of perfect timing. It’s a game of supply and demand. If you’re waiting for the "New Year rate drop" to solve your problems, be careful what you wish for. You might get the rate you want, but find yourself in a bidding war you can't win.
If you're ready, and the numbers work, the best time to buy isn't when the news tells you to. The best time to buy is when you find the right home for your family.
FOX 5 will host a 60-minute Facebook Live chat later today where viewers can ask questions or share comments about the housing market or other real estate topics.
About John Adams
John Adams is an Atlanta native, real estate broker, investor and author specializing in residential real estate. He believes homeownership is the best investment most Americans will ever make. More information about his work is available through the Liberty Real Estate Investors Association at libertyreia.com.