Every week, somebody leans across the table and asks me some version of the same question.
“Kate, shouldn’t we just wait for prices to crash?”
I get it. Prices feel high. Rates feel higher. Waiting feels safe.
But a new piece of math making the rounds this week should change how we talk about waiting. And if you work with buyers, you need this number in your back pocket.
The Number That Changes the Conversation
Emily Fu at the New York Post broke down a fresh Barron’s analysis, and the headline is a stunner. For today’s buyer to have the same monthly payment as the typical homeowner already sitting on a low-rate mortgage, home prices would need to fall about 32%.
Here’s how the math works.
The median U.S. home sold for $429,100 in August. With 20% down and rates around 7.3%, the principal and interest payment lands near $2,353 a month. Meanwhile, the typical existing mortgage holder has a 3.88% rate and pays about $1,597.
That’s a gap of $756 a month. Roughly 47% more, for the exact same house.
To close that gap with price alone, the median home would have to drop to about $291,181.
Let that sink in for a second.
Why the Crash Isn’t Coming to the Rescue
During the Great Recession, U.S. home prices fell about 27.5% from the 2006 peak through 2010. That was the worst housing collapse most of us have ever lived through. The drop buyers are waiting for would have to be deeper than that.
And the people who study this for a living aren’t predicting it. NAR’s research director, Nadia Evangelou, told Barron’s she doesn’t expect anything close. Her view is that affordability improves gradually, through some mix of lower rates, rising incomes, and slower price growth.
There’s a reason for that. Crashes need forced sellers. In 2008 we had loose lending and a flood of distressed owners. Today, U.S. homeowners are sitting on a record $17.9 trillion in equity, about $310,000 per mortgage holder according to Cotality. People with that kind of cushion don’t have to dump their homes.
Waiting for a 32% crash is a little like waiting for a hurricane to knock down the price of beachfront property. It could happen. But if it does, the economy around you probably isn’t in great shape either, and neither is your ability to qualify.
The Real Problem Isn’t Price. It’s Payment.
Here’s the principle under all of this, and it’s the one I want every agent and loan officer to own.
Buyers don’t buy prices. They buy payments.
That 32% figure is really a story about the lock-in effect. Millions of owners grabbed rates in the 2s and 3s back in 2020 and 2021. Those loans are now so valuable that people won’t let go of them. Rick Palacios Jr. of John Burns Research and Consulting went so far as to call those ultralow mortgages a “generational scourge” because they keep homes off the market.
Fewer listings. Sticky prices. Higher payments. That’s the squeeze.
But life doesn’t wait for rates. Cotality economist Thom Malone pointed out that divorce, job changes, growing families, and retirement keep people moving no matter what the market is doing. Here in Clarksville, add PCS orders to that list. Fort Campbell families don’t get to time the market. The Army times it for them.
What the Math Really Teaches Us
When I run the numbers on that same median home, something jumps right off the page.
A 3% price cut, about $12,900 off the price, saves the buyer roughly $71 a month.
A 2-1 temporary buydown on the same loan costs about $8,100 and lowers the payment by around $447 a month in year one and $229 a month in year two.
Same seller. Smaller check. Far more relief for the buyer when they need it most.
That isn’t a trick. It’s simply understanding that the payment is where the pain lives, and putting the money right there.
Illustrative figures based on a $343,280 loan at 7.3% over 30 years, principal and interest only. A 2-1 buydown is a temporary reduction; the buyer must qualify at the full note rate, and seller credits are subject to loan program limits.
For Realtors: Change the Script
If your buyers are stuck in wait-and-see mode, try reframing the conversation:
- Negotiate the payment, not just the price. Before you ask for a reduction, ask what that same money could do as a seller-paid buydown.
- Hunt for assumable loans. FHA and VA loans can be assumable with lender approval. In this market, a seller’s 3% rate might be the most valuable feature in the house.
- Separate the price from the rate. The price is permanent. A rate may be refinanced later if rates fall and the buyer qualifies. That’s a possibility, not a promise, so buy a payment you can live with today.
- Get buyers fully pre-approved early. When they know their real payment comfort zone, fear turns into a plan.
Listing agents, this lesson flips for you too. On a stale listing, another price drop might not move the needle. A payment story often will.
For Buyers: Focus on What You Can Control
You can’t control rates. You can’t control the national market. You can control your plan.
Know your payment, not just your price. Protect your credit. Learn your down payment options, including VA, FHA, and down payment assistance. And ask your lender to lay out two or three payment strategies side by side so you can see the tradeoffs with your own eyes.
Knowledge is power. A buyer who understands the math stops waiting for permission from the headlines.
The Deal Doctor’s Prescription
Markets change. Rates change. People don’t. They still need a home for the next chapter of their lives.
So here’s my challenge for you this week. Pick one buyer who’s sitting on the fence. Sit down together and run the payment both ways: price cut versus buydown. Let them see the difference.
Clarity beats pressure every single time.
Want me to run those scenarios for your next buyer or your stalest listing? Just call Kate at (931) 980-9764 or email Kate@VanDykMortgage.com. Buyers can get started any time right here: create your account.
Frequently Asked Questions
1. Why would home prices need to fall 32%?
Because that’s what it would take for a buyer at today’s rates, around 7.3%, to match the roughly $1,597 monthly payment of the typical homeowner with a 3.88% rate. On the $429,100 median home, the price would need to drop to about $291,181.
2. Is a housing crash likely?
Most experts don’t expect one. Homeowners hold record equity, there’s no wave of forced sellers, and a 32% drop would be worse than the 2008 collapse. Economists expect affordability to improve slowly instead.
3. What is the mortgage rate lock-in effect?
It’s when homeowners hold on to their house because giving up a low rate would make their next home far more expensive each month. Fewer people list, inventory stays tight, and prices stay firm.
4. Should I wait for rates to drop before buying?
Only you can decide that, and nobody can promise where rates will go. The better question is whether the payment fits your budget and your life plans today. If it does, waiting carries its own risks, like rising prices or more competition if rates do fall.
5. What is a 2-1 buydown?
It’s a temporary rate reduction, typically funded by the seller or builder. The rate is 2% lower in year one, 1% lower in year two, and returns to the full note rate in year three. Buyers still qualify at the full rate.
6. Is a seller credit better than a price reduction?
Often, yes, when monthly payment is the buyer’s biggest concern. In our example, a 2-1 buydown costing about $8,100 lowered the first-year payment far more than a $12,900 price cut. Every deal is different, so run both scenarios.
7. What is an assumable mortgage?
It’s a loan a qualified buyer can take over from the seller, keeping the seller’s original rate and terms. FHA and VA loans can be assumable with lender approval. The buyer usually needs to cover the seller’s equity with cash or secondary financing.
8. Can I refinance later if rates go down?
Possibly. Refinancing depends on future rates, your credit, your income, your home’s value, and closing costs. It’s an option worth knowing about, never a guarantee, so choose a payment you’re comfortable with today.
9. How can Realtors help buyers who are afraid to commit?
Lead with payment education. Get them pre-approved, show side-by-side payment strategies, look for assumable loans, and use seller credits strategically. Fear shrinks when buyers can see the numbers clearly.
10. Does any of this apply to military buyers near Fort Campbell?
Absolutely. PCS moves don’t wait for perfect markets. VA loans offer zero down for eligible buyers, no monthly mortgage insurance, and can be assumable, which makes payment strategy even more powerful for military families.
Source: Emily Fu, “Americans hoping for an ’08-style housing crash to afford a home are out of luck,” New York Post, October 5, 2026, citing analysis from Barron’s, ICE Mortgage Technology, the Federal Reserve, and Cotality. Commentary and opinions in this post are my own.
Kate Deiboldt, Senior Mortgage Advisor, NMLS #18487. VanDyk Mortgage Corporation, Company NMLS #3035. Licensed in TN, KY, AL, FL, GA, TX, and IL. Equal Housing Lender. This is not a commitment to lend. All loans subject to credit approval, underwriting guidelines, and program eligibility. Rates, terms, and programs are subject to change without notice. Payment examples are for illustration only and do not include taxes, insurance, or mortgage insurance; actual payments will be higher. VA loan eligibility requirements apply. http://www.nmlsconsumeraccess.org
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