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If you’ve been following the real estate market lately, you’ve probably heard a lot about interest rates. As of December 2025, mortgage rates are hovering in the mid-6% range—roughly double what buyers saw just a few years ago during the pandemic era.
For many potential buyers and sellers, high interest rates have created uncertainty. “Should I wait for rates to drop?” “Is this the right time to sell?” “Can I even afford to buy right now?” These are the questions I hear almost daily from clients in Pennsylvania and Maryland.
The truth is, interest rates are one of the most powerful forces shaping today’s real estate market—but they’re not the only factor you should consider. Let’s break down what’s really happening and what strategic options you have right now.
Understanding the Rate Reality
Where We Are Today
Mortgage rates in 2025 are expected to stay in the mid-6% range and are not projected to fall back to pandemic lows anytime soon. This “higher for longer” environment means buyers face significantly larger monthly payments for the same home price.
The Historical Perspective
Here’s something that might surprise you: today’s rates aren’t particularly high from a historical perspective. The 30-year fixed-rate mortgage has averaged around 7% since the 1950s. The highest rate ever recorded was 18.63% in October 1981.
The key takeaway: While rates feel high compared to the pandemic era, they’re actually close to historical norms. The 2020-2021 period was the exception, not the rule.
How High Rates Are Reshaping the Market
Reduced Buying Power
Elevated mortgage rates, combined with several years of strong home price growth, have pushed affordability to some of the weakest levels in recent memory. Monthly payments on a typical home have risen by hundreds of dollars compared with 2019.
Real-world example:
- $400,000 loan at 3% = $1,686/month (principal & interest)
- $400,000 loan at 6.5% = $2,528/month (principal & interest)
- Difference: $842/month or $10,104 annually
The “Lock-In” Effect
Most existing homeowners carry mortgages well below current rates, often under 4% or 5%, and are reluctant to trade those low payments for much higher ones. This locked-in effect keeps many people from listing their properties, limiting the supply of existing homes even as demand softens.
Shifting Market Dynamics
High rates have cooled the frenzied seller’s market of 2020-2022. In many areas, homes stay on the market longer, buyers have more negotiating power, and bidding wars have become less common—creating opportunities for qualified buyers.
Smart Strategies for Today’s Buyers
Focus on Total Cost, Not Just Rate
While the interest rate matters, consider the complete picture. What you CAN control:
- Purchase price (through negotiation)
- Down payment amount
- Home condition (avoiding costly repairs)
- Property taxes (choosing the right location)
- Energy efficiency (lower utility bills)
In some cases, buying a slightly more expensive home with better energy efficiency or lower taxes can actually cost less monthly than a cheaper home with higher operating costs.
Plan to Refinance Later
Many buyers are adopting a “marry the house, date the rate” strategy—purchase now with the understanding that you can refinance when rates eventually decline.
While potential Federal Reserve rate cuts into 2026 could gradually ease mortgage rates, forecasters generally see rates staying closer to the mid-6% range in the near term. Be prepared to wait 1-3 years for meaningful rate drops.
Explore New Construction
Homebuilders have stepped in with incentives like rate buydowns, closing credits, and upgrades to attract buyers. These incentives can effectively reduce the rate a buyer pays into the 4-6% range on new homes, making new construction relatively more attractive than existing homes.
Strategic Moves for Sellers
Price Strategically
Buyers are more payment-conscious than ever. Even small price differences significantly impact their monthly costs. Work with your realtor to:
- Analyze recent comparable sales
- Price competitively to attract offers
- Account for current market conditions
Offer Buyer Incentives
Creative seller incentives can make your home more attractive:
- Rate Buydowns: Pay points to reduce the buyer’s interest rate for 1-3 years
- Closing Cost Credits: Help with buyer’s upfront costs
- Home Warranty: Provide peace of mind about systems and appliances
- Move-In Ready Condition: Well-maintained homes attract more buyers
The Downsizing Advantage
If you’re considering downsizing, high interest rates actually create a unique opportunity—if you approach it strategically.
Why Rates Matter Less for Downsizers
Many downsizers can purchase their next home with significant cash from their current home’s equity, minimizing or eliminating the need for a mortgage. This means:
- You’re less affected by rates: If you’re borrowing little or nothing, current rates don’t impact your situation much
- You have negotiating power: Cash buyers are more attractive to sellers
- Your monthly costs can drop dramatically: Even with a small mortgage, downsizing typically reduces property taxes, insurance, utilities, and maintenance—often far outweighing higher interest costs
Run Your Personal Numbers
Don’t let rate headlines scare you away from a move that makes sense. Calculate your actual costs for staying versus moving. In many cases, downsizing still results in significant monthly savings even with higher interest rates.
The Risk of Waiting
Many potential buyers and sellers are waiting for “better” conditions—but waiting carries its own risks:
Prices May Rise When Rates Drop
If rates fall, demand will surge, likely driving prices higher. You might save on interest but pay significantly more for the home itself—potentially negating any monthly payment advantage.
Life Doesn’t Wait
Whether you need more space, want to downsize, or are relocating for work or family, delaying life decisions for market timing can cost you in ways that matter more than interest rates.
Rates May Stay Elevated
Analysts expect rates to remain in the mid-6% range for the foreseeable future. Waiting for a return to pandemic-era rates may mean waiting indefinitely.
Making Your Decision: Key Questions
Rather than waiting for “perfect” market conditions, ask yourself:
Lifestyle: Does my current home meet my needs, or is my quality of life being impacted?
Financial: Can I afford the payment at current rates? What’s my total cost of homeownership—not just the interest rate?
Strategic: Could I refinance later if rates improve? Am I making this decision based on my situation or market headlines?
The Bottom Line
High interest rates have changed the real estate landscape, but they haven’t eliminated opportunities. For buyers, today’s market offers less competition and more negotiating power. For sellers, strategic pricing and creative incentives attract serious buyers. And for downsizers, the math often works in your favor regardless of rates.
The key is making decisions based on your personal situation, not fear of current market conditions. Interest rates are just one factor—and often not the most important one.
Ready to Explore Your Options?
Whether you’re considering buying, selling, or downsizing, I’m here to help you navigate today’s market with clarity and confidence. Let’s discuss your specific situation and create a strategy that works for you—regardless of what interest rates are doing.
Contact Alan Fishman, Your Transition Specialist:
📱 Cell: 301.518.8390 (Call or text anytime)
📧 Email: alan.fishman@cbrealty.com
🏢 Office: 717.762.7111
📍 Address: 1814 E. Main St., Waynesboro, PA 17268
🌐 Website: fishmanfindshomes.com
Licensed in Pennsylvania and Maryland
Let’s schedule a no-obligation consultation to discuss how current market conditions affect your specific goals and what strategic options you have.
Alan Fishman specializes in helping buyers, sellers, and downsizers navigate changing market conditions throughout Pennsylvania and Maryland. His educational approach ensures clients understand both their challenges and opportunities in any market environment.
