By Heather Gann
Alabama homebuyers could be playing a waiting game for an interest rate that some say is a thing of the past.
In a recent nationwide survey conducted by homebuilder Century Communities, the majority of prospective homebuyers in the state said they are waiting for interest rates to drop below 3% before they take the leap.
This is almost 4% lower than where rates are currently sitting on average locally and across the U.S.
And Alabama is not the only state looking for a price drop. The majority of people shopping in Idaho, Iowa, Mississippi, Nebraska, Texas, and West Virginia are also waiting for rates to fall below 3%.
According to the survey’s text, the last time nationwide rates were below 4% was in March of 2022.
And some sources say these buyers could be waiting indefinitely for rates that will never come again.
“I think the days of 3% interest rates are over and people will get used to 6%-ish rates over time,” said Birmingham realtor Marshall Malone.
“Historically 7% interest rates are actually quite good. In the 1980′s the rates were at 18%.”
Bennie Waller, a William Cary Hulsey faculty fellow at the Alabama Center for Real Estate, echoed similar thoughts in a previous interview with The Birmingham News.
“Gen Z has never seen interest rates other than three, four, or five percent,” he said.
“For my generation and other older generations six, seven, and eight percent is not an unrealistic interest rate.”
“I graduated from high school in the mid-80s, interest rates were in the mid 18s. I know for people in younger generations the 80s seems like a gajillion years ago, but it wasn’t really that long ago.”
According to Century Communities’ survey, prospective buyers in Colorado, Georgia, Florida, Illinois and Pennsylvania are willing to move forward with rates in the 5.0% to 5.4% range, which Waller said is closer to a realistic goal.
“If I’ve got good credit, I could probably get an interest rate in the upper fours maybe lower fives,” he said.
“I wouldn’t hesitate to do that [buy a house] because it’s not unrealistic.”
Buy now, negotiate later?
Alabamians were also largely against the idea of buying at a higher rate now with plans to refinance later.
This aligned with the majority of other respondents, with 55% saying they were unwilling to take that risk, and 45% saying they were open to it.
According to the survey, younger generations are driving the 45%, with 49% of Millennials and Gen Zers open to the idea of refinancing, compared to just 38% of Gen Xers and 35% of Baby Boomers.
“This generational split suggests that younger buyers may have a greater appetite for risk, betting on future rate drops to make refinancing worthwhile,” the survey reads.
“Homeowners may be willing to take on higher rates now out of concern that inventory will tighten even further once rates drop, creating fierce competition for fewer homes.”
“Many are also betting on the potential for future rate cuts, anticipating they can refinance later when conditions improve, making the initial rate less of a long-term concern.”
Predictions for 2025
While interest rates have shown signs of trending down this year, some economists predict that they could climb again in 2025 following President-elect Donald Trump’s win.
“Markets expect a strong economy under Trump, viewed as the more pro-business candidate,” wrote Tim Lucas of the Mortgage Research Center.
“According to American Century Investments, Trump plans to cut corporate taxes from 21% to 20%, while [Kamala] Harris had planned to raise corporate taxes to 28% and increase taxes on stock buybacks from 1% to 4%.”
“If companies truly are stronger under Trump, they will hire more and pay more, leading to ‘wage-push inflation.’ This is when companies, under a tight labor market, fight harder for employees with higher pay.”
“Companies then pass on these costs to consumers in the form of higher prices for goods and services, the very definition of inflation.”
In a Sept. email to TIME, Karoline Leavitt, the Trump campaign’s national press secretary, said that “President Trump can be trusted to restore the American dream because he has a real plan to defeat inflation, bring down mortgage rates, and make purchasing a home dramatically more affordable.”
“He will rein in federal spending, stop the unstainable [sic] invasion of illegal aliens which is driving up housing costs, cut taxes for American families, eliminate costly regulations, and free up appropriate portions of federal land for housing,” she wrote.
But several economists have argued that federal interest rates are an issue largely out of the president’s control.
To buy or not to buy
While Alabamians may never see the 3% interest rates they’re waiting for, Waller said buying is still the better option for those staying somewhere long-term.
“If I were looking to move tomorrow and if I were looking to move somewhere where I was planning on being there for a sustained period of time, I would not hesitate to buy a house,” he said.
