Are Interest Rates Really the Problem?

The Cost of Waiting Explained

For the last few years, interest rates have dominated nearly every conversation about real estate. Whether they’re going up, going down, or holding steady, it often feels like everything hinges on that single number.

I wanted to step back and ask a different question:
Are interest rates really the biggest issue — or are we focusing on the wrong thing?

To answer that, I looked at long-term data and ran a simple comparison.

Looking at the Bigger Picture: 50 Years of Data

Rather than focusing on short-term swings, I reviewed trends over the past 50 years.

• In 1974, the median home price was about $36,000
• By 2024, that number had risen to roughly $420,000

Over the same period, interest rates have moved dramatically:

• Around 9% in 1974
• Peaking near 18% in 1981
• Falling to historic lows below 4% in the early 2020s
• Rising again into the 6–7% range

What stands out is this:
while interest rates move up and down, home prices trend steadily upward over time.

Why the Last 20 Years Were an Anomaly

For roughly two decades, we lived in an unusually low interest rate environment. Rates under 4% became normal, even though historically they were anything but.

Those low rates were great for borrowing — but they were also part of a broader economic anomaly. Without another perfect storm of economic conditions, it’s unlikely we’ll return to sub-4% mortgage rates anytime soon.

So the real question becomes:
What happens if those historically low rates don’t come back?

A More Realistic Comparison: A 10-Year Window

Most homeowners don’t keep the same mortgage for 30 years. On average, people move every 7–10 years, so a decade is a more realistic comparison.

Let’s look at the numbers.

Home Prices

• 2014 median home price: ~$288,000
• 2024 median home price: ~$420,000
• Difference: ~$132,000

Even accounting for short-term spikes, long-term pricing trends form a fairly steady upward line.

Interest Rates

• 2014 average rate: ~4.1%
• 2024 average rate: ~6.9%
• Difference: ~2.8%

That’s a meaningful increase — but it’s not historically extreme.

Monthly Payment Comparison (Apples to Apples)

Keeping principal and interest only:

2014 Purchase

• $288,000 at 4.1%
• ~$1,114/month

2024 Purchase

• $420,000 at 6.9%
• ~$2,212/month

That’s nearly double.

But here’s the key insight.

What If Interest Rates Were High in 2014?

Let’s remove interest rates from the equation and isolate price growth.

• $288,000 at 6.9% → ~$1,516/month
• $420,000 at 6.9% → ~$2,212/month

The difference? ~$696/month

That means more than half of the payment increase came from the home price, not the interest rate.

The Real Cost of Waiting

This is the part that often gets missed.

Interest rates:

• Go up
• Go down
• Can be refinanced

Home prices:

• Historically rise over time
• Are far harder to “undo”

Waiting often means paying more for the same house, even if rates improve slightly later.

That’s why you’ll often hear the phrase:
“Marry the house, date the rate.”

You can refinance a mortgage.
You can’t refinance the purchase price.

What This Means for Buyers Today

Even if prices feel high and rates feel uncomfortable:

• It’s unlikely home prices will move backward long-term
• Rates can improve and be refinanced
• Equity growth often outpaces rate changes

Trying to time the market perfectly can be more expensive than buying thoughtfully and adjusting later.

Final Thoughts

I’m not a financial advisor — but I am a residential real estate professional. My goal is to help people understand the full picture, not just the headline numbers.

If you have questions about how interest rates, pricing, or timing affect your specific situation, I’m always happy to talk it through.