Should I Buy a House Now or Wait? What I Tell My California Clients

I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. “Should I buy now or wait?” is the question I get more than any other. Here’s the same framework I walk every client through — with real numbers. Call (800) 239-1103.

My honest answer — whether the client is in Tiburon, Palm Springs, or Sacramento — is that waiting for the perfect market is usually how people miss the market. But “buy now” is not the right answer for everyone. The decision should turn on your readiness, not on a rate forecast nobody can make reliably, including me.

The Question Behind the Question

When a buyer asks, “Should I wait for rates to drop?” they’re usually asking something more specific: “Will I regret this in two years?” Nobody wants to buy at 7% and watch a neighbor refinance at 5.5% eighteen months later. That’s a legitimate fear — but it solves for only one variable. The price of the house, what you pay in rent while you wait, and how long you’ll own the home matter just as much.

Where Rates Stand in Late September 2026

Freddie Mac’s weekly survey put the average 30-year fixed at 7.03% on September 24, 2026 — up from 6.95% the week before and 6.30% a year earlier. The 15-year fixed averaged 6.42%. For perspective, the modern peak was 7.79% in late October 2023.

On September 16, 2026 the Federal Reserve raised the federal funds target range by 0.25% to 3.75%–4.00% — its first hike since 2023 — citing inflation that “remains elevated.” The Fed doesn’t set mortgage rates directly (they track the 10-year Treasury and mortgage-bond demand), but a Fed that is tightening rather than cutting makes a quick return to 5-handle rates unlikely in the near term. I explain the mechanics in why mortgage rates change daily, and you can see today’s pricing on my California mortgage rates page.

Why “Wait for Rates to Drop” Often Backfires in California

Buyers who wait imagine a world where rates fall and prices stay flat. In California’s supply-constrained markets, that combination is rare. Lower rates bring sidelined buyers back all at once, and more buyers chasing the same limited inventory pushes prices up.

The clearest example is 2020. Freddie Mac’s 30-year average fell from roughly 3.6% in January 2020 to about 2.7% in January 2021. Over the same 12 months, the California statewide median price (C.A.R.) rose 21.7% — from $575,160 to $699,890. With 20% down, principal and interest on the January 2020 median at 3.6% was about $2,092/month. On the January 2021 median at 2.65%, it was about $2,256/month. Rates dropped nearly a full point and the payment went up.

It doesn’t always play out that dramatically — and 2026 is a flatter market. C.A.R. reported the August 2026 statewide median at $901,420, up just 0.1% year over year, with 3.7 months of unsold inventory. That’s exactly why I don’t sell anyone on “prices only go up.” But if rates fall meaningfully, demand returns quickly, and the rate savings get competed away in price.

The Math on Waiting: A Worked Example

Take a $1,100,000 home with 20% down — an $880,000 loan at 7.00%. Principal and interest today: about $5,855/month. Now suppose you wait a year and rates fall. Here’s the principal and interest on the same house (still 20% down) depending on what prices do in the meantime:

Principal and interest only, 30-year fixed, 20% down. Illustrative — not a rate quote or a price forecast.

A half-point drop with 5% appreciation leaves your payment essentially where it is today — and you’d need 20% of a higher price as a down payment, plus a year of rent paid in the meantime. A full-point drop with flat prices does help (about $580/month). The honest takeaway: waiting only pays if rates fall substantially and prices stay flat — and that’s the scenario you can’t count on.

The Five Questions I Ask Every Buyer

Rather than forecasting rates, I walk clients through five questions. The answers usually make the decision clear.

1. Can you afford the payment at today’s rate without stretching? Not “can you technically qualify” — can you carry this payment comfortably for 12–18 months even if something goes sideways? If yes, the rate becomes a smaller factor.

2. How long will you stay? On a two-year hold, you pay closing costs on both ends and have little runway to refinance. If this is the house for 7–10 years, short-term rate moves matter much less. As a rule of thumb, if you’re not confident you’ll stay about five years, renting often wins.

3. What’s your real alternative? For most people it isn’t “buy now vs. buy later at a lower rate” — it’s “buy now vs. keep renting.” Rent builds no equity. That’s not automatically wrong, but it belongs in the math.

4. Is the house right? I’ve seen buyers talk themselves into the wrong house because rates looked good, and walk away from the right one chasing a rate that never came. A great house at 7% beats a mediocre house at 5.5%.

5. Does a 30-year fixed actually fit your plan? If you expect to sell or refinance within 7–10 years, a 7/6 or 10/6 ARM, or a temporary rate buydown (often paid by the seller), may cost less than paying for 30 years of fixed-rate certainty. See ARM vs. fixed.

When Waiting Is the Right Call

• Your credit needs work. Conventional pricing adjustments step down as scores rise, so moving from the high 600s into the 740+ range can meaningfully improve your rate or cost. That often takes months, not years. See credit score requirements.
• Your income documentation isn’t ready. If you’re self-employed and your most recent return will show stronger income, it may pay to file first — or to use a bank statement loan that qualifies you on 12–24 months of deposits instead of tax returns.
• Your down payment and reserves aren’t there yet. A stretched buyer is a stressed buyer. Aim for a down payment you’re comfortable with plus several months of reserves after closing. (It doesn’t have to be 20% — see how much down payment you need.)
• You’re borderline on debt-to-income. If you qualify only at the edge of guidelines, a modest rate drop — or paying down a car loan — can widen your lender options. See DTI in California.
• Your life is in flux. A likely job move, a growing family, or real uncertainty about where you want to live are all good reasons to rent a while longer.
• Your local market is softening. Some inland and Central Valley submarkets have been flat or down. If prices there are drifting lower, the math on waiting improves.

“Buy Now, Refinance Later” — and Why I Only Half-Agree With “Date the Rate”

The idea is real, but it only works if the loan is set up for it from day one: no prepayment penalty, reasonable closing costs, and no heavy discount points you’ll never earn back if you refinance in two years.

Here’s the math. Buy the $1.1M home above at 7.00% with an $880,000 loan ($5,855/month). Eighteen months later, rates are at 6.00%. Your balance is about $866,000; refinancing into a new 30-year at 6.00% puts principal and interest near $5,194 — roughly $660/month less. With $8,000–$10,000 in refinance costs, break-even is about 12–15 months.

But refinancing is an upside scenario, not a guarantee. The more honest version of “marry the house, date the rate” is: buy a house you can afford at today’s rate and would still be happy with if rates never drop. If they do, we refinance. When rates move, I can typically turn a refinance for existing clients in about 3–4 weeks. See when refinancing makes sense.

The Prop 13 Factor Most People Miss

Under Proposition 13, your property’s assessed value is set at purchase and can rise by no more than 2% per year while you own it; the base tax rate is 1% of assessed value plus voter-approved local bonds and assessments. Buying at today’s price locks today’s assessed value. If prices rise while you wait, you lock a higher base — a cost that compounds for as long as you own the home. More in my Prop 13 guide.

Rent vs. Buy in Marin: What I’m Seeing

Many of my Marin clients are dual-income professionals renting in San Rafael or Corte Madera. C.A.R. put Marin’s August 2026 median at $1,650,500, and its second-quarter affordability index found 23% of Marin households could afford the median-priced home (19% statewide). A $1.2M home with 20% down at 7.03% is about $6,406/month in principal and interest, before taxes and insurance — well above most rents for comparable homes. That gap is real.

What offsets it: principal paydown, a Prop 13–protected tax base, and — if you itemize — mortgage interest on up to $750,000 of acquisition debt may be deductible (confirm with your CPA). Over a five-to-seven-year hold, ownership usually comes out ahead; over two or three years, it often doesn’t.

Inventory in Marin is still limited. The buyers winning right now have financing fully underwritten before they shop and act when the right property appears. The ones struggling need rates, price, and inventory all to be perfect at the same time. That window may never come.

The Bottom Line

The best time to buy is when you’re ready: solid credit, a down payment you can live with, stable income, reserves left over, and a plan to stay at least five years. If that’s you, today’s rates are workable — and we can structure the loan so a future refinance is easy. If it’s not you yet, work on the missing piece. That’s the same answer I’d give my own family.

And if a bank has already told you no — self-employed, recent job change, non-traditional income — that’s usually a solvable problem, not a reason to wait. That’s most of what I do.

Call me at (800) 239-1103 or apply online. Tell me where you are and what’s holding you back.

Frequently Asked Questions — Buying Now vs. Waiting in California

Is it better to buy a house in California now or wait?

For buyers who are financially ready — solid credit, an adequate down payment with reserves left over, stable income, and plans to stay five or more years — buying when ready has historically beaten trying to time rates in California’s supply-constrained markets. Waiting bets on rates falling while prices stay flat, which rarely happens in the Bay Area or coastal Southern California. If you aren’t ready financially, waiting and fixing that gap is the right move.

What happens to California home prices when mortgage rates drop?

In low-inventory markets, lower rates usually bring more buyers and push prices up. From January 2020 to January 2021, the 30-year average fell from about 3.6% to about 2.7% while the California median price rose 21.7% (C.A.R.), so the monthly payment on a median home actually increased.

How much would rates need to drop to make waiting worthwhile?

It depends on what prices do. On a $1.1M purchase with 20% down, a 0.50% rate drop is wiped out by about 5% price appreciation. A 1% drop with flat prices saves roughly $580/month in principal and interest. Waiting only clearly pays when rates fall substantially and prices stay flat — and you also pay rent the whole time.

What is the “buy now, refinance later” strategy?

You buy at today’s price and rate, then refinance if rates fall. It works when your loan has no prepayment penalty, you avoid paying heavy points up front, and the payment is comfortable even if rates never drop. On an $880,000 loan, a move from 7.00% to 6.00% after 18 months saves about $660/month; with $8,000–$10,000 in costs, break-even is roughly 12–15 months.

Are mortgage rates expected to drop in late 2026?

Nobody can promise that. As of September 24, 2026, Freddie Mac’s 30-year average was 7.03%, and the Federal Reserve raised its policy rate on September 16, 2026 to fight inflation. A return to the 5% range would likely require a clear slowdown in inflation or the economy. Plan around a payment you can afford today.

How does Prop 13 affect the buy-now-or-wait decision?

Prop 13 sets your assessed value at your purchase price and limits increases to 2% per year while you own the home. If prices rise while you wait, you lock in a higher assessed value and higher property taxes for as long as you own the property.

What is the minimum down payment to buy in Marin County?

Marin’s 2026 conforming and FHA loan limit is $1,249,125 for a single-family home. Conventional loans at or below the $832,750 baseline can go as low as 3–5% down; high-balance conforming loans above that have tighter limits, and FHA requires 3.5% down. Above $1,249,125 you’re in jumbo territory, where 10–20% down is typical. Budget for closing costs and reserves on top of the down payment.

Related Resources

• Current Mortgage Rates in California
• California Mortgage Outlook 2026
• Why Mortgage Rates Change Daily
• How Much House Can You Afford in California?
• First-Time Home Buyer Programs in California
• Mortgage Pre-Approval Checklist
• Marin County Mortgage Rates