TLDR: Should You Wait for Fed Rate Cuts to Buy in Los Angeles?
No. Waiting for Fed rate cuts will cost more. Current 6.50% mortgage rates already reflect September 17th's expected cut. Rates may only drop to 6.2% while LA home prices rise and competition increases (refinance apps up 47%). Price appreciation outpaces rate savings. Buy when ready, not when chasing rates.
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So You've Been Following The Fed Meeting News...
Refreshing your mortgage rate apps and wondering if you should hold off on house hunting until after September 17th's Fed meeting where a rate cut is widely expected. As someone who's been helping home buyers navigate tricky markets in Los Angeles since 2005, here's my opinion on what's really happening, and why waiting to buy a home could actually cost you more.
The Fed Cut Is Already Baked Into Today's Rates
Here's what most people don't realize: mortgage interest rates don't magically drop when the Federal Reserve cuts the federal funds rate. They're forward-looking, which means the mortgage market has already priced in next week's expected 0.25% cut. Recent 30-year mortgage rates of 6.46% in California already reflect what's coming. Even if the Fed delivers exactly what's expected, you might see 30-year mortgage rates drop to 6.2% or 6.3%, but not the dramatic plunge many buyers are hoping for.
The bond market, which actually drives mortgage interest rates, is more concerned about inflation staying sticky than Federal Reserve policy. The 10-year Treasury yield remains the key driver of what mortgage lenders actually charge borrowers. That's why rates have remained relatively stable even as Fed rate cuts expectations have solidified to 95%+ probability. Use any mortgage calculator to see how even a quarter-point drop translates to minimal monthly savings—about $25-30 per month on an $800,000 loan.
Los Angeles Inventory Won't Wait for You
While you're sitting on the sidelines watching rate predictions, here's what's happening in our local real estate market: Los Angeles County median home prices reached $884,050 in July 2025, with homes taking an average of 28 days to sell, a 40% increase from last year, indicating more negotiating room for buyers. The market has found relative stability with prices down just 0.3% year-over-year.
And when interest rates do drop (even slightly), expect inventory to tighten further as hesitant sellers finally list and dormant buyers re-enter the market. I've seen this pattern before. Refinance applications are already up 47% to the highest level since October, signaling buyer optimism is building before the Fed even acts.
The Reality of Price Appreciation vs. Rate Drops
Here's the math that matters: home prices in Los Angeles have shown resilience despite rate volatility. While we're seeing a slight year-over-year decline of 0.3%, the California Association of Realtors forecasts prices to rise 4.6% to $909,400 statewide in 2025. When you wait for rates to potentially drop 0.25%, you're competing against other buyers who had the same idea, and sellers know demand is building.
The most optimistic Fed cut scenarios suggest mortgage rates might drop from 6.50% to 6.2%, which is about $125 monthly savings on a million-dollar loan. But if home prices appreciate just 0.5% during your waiting period, that same house costs $5,000 more, requiring an additional $1,000 down payment and negating months of rate savings. Price appreciation often outpaces the benefit of slightly lower rates, especially when you factor in increased competition from other buyers waiting for the same rate drop.
Focus on What You Can Control
Instead of trying to time the market, smart buyers are focusing on improving their negotiating position. In today's market, that means getting pre-approved or fully underwritten with local lenders who can close in 21 days, not 45. It means working with a knowledgeable real estate agent (ME! 😃) who understands current market dynamics and can collaborate with you to create competitive offers that fit your budget and timeline.
It also means exploring different loan products. Consider adjustable-rate mortgage options if you plan to move or refinance within 5-7 years. These products often offer lower initial rates and can make sense in today's environment, especially if you're building equity in an appreciating market.
Look at neighborhoods that are still offering value. Areas like Palms and Mar Vista are seeing homes sell in reasonable timeframes while Beverly Hills and Hollywood Hills properties are sitting longer. When comparing neighborhoods, factor in property taxes along with home prices, which can vary significantly across LA County and impact your total monthly housing costs. Sometimes the best "deal" isn't a lower rate, it's finding the right house where sellers are more motivated.
The Bottom Line: Perfect Timing Is a Myth
In my 20 years helping LA home buyers and sellers, I've learned that people who wait for perfect conditions often wait indefinitely. Mortgage rates, home prices, inventory levels—they're all moving targets. What doesn't change is that good homes in good neighborhoods appreciate over time, and the best time to buy is when you're financially ready and have found the right place.
The Fed will make their decision on September 17th, but your housing decision shouldn't hinge on theirs. Focus on finding a home you love, in a neighborhood that works for your life, at a price that fits your budget. The cost of waiting often exceeds the benefit of perfect timing, and the best interest rate is the one that gets you into the right home.
Ready to start your search without the guesswork?
Give me a call and let's get you where you want to go!
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Frequently Asked Questions
Q: If the Fed cuts rates, won't all mortgage rates drop significantly?
A: Not necessarily. Mortgage rates are influenced more by the 10-year Treasury yield and bond market conditions than the federal funds rate. A Fed rate cut might only lower mortgage rates by 0.1-0.3%, not the full amount of the cut.
Q: Are there any situations where waiting for lower rates makes sense?
A: Waiting might make sense if you're not financially ready to buy, haven't found the right home, or if mortgage rates are expected to drop significantly more than 0.5%. However, these scenarios are rare and unpredictable.
Q: What if I already have a pre-approval? Should I wait to use it?
A: Pre-approvals typically expire after 60-90 days. If you find the right home and your financial situation is stable, using your pre-approval now avoids the risk of rates rising or your approval expiring.
Q: How do I know if I'm getting a competitive interest rate?
A: Shop with 3-5 different lenders within a 14-day period to compare rates without hurting your credit score. Current rates can vary by 0.25-0.75% between lenders for the same borrower.
Q: Is it better to buy now or rent until rates come down?
A: This depends on your timeline and local rent costs. If you plan to stay 3+ years and current rent exceeds what your mortgage payment would be, buying often makes more sense regardless of rate timing.
Q: What happens to my buying power if I wait 6 months?
A: Your buying power could decrease if home prices rise faster than rates fall. A 2% price increase typically outweighs a 0.5% rate decrease in terms of total cost.
Hero Image Credit: “Washington D.C. - Federal Reserve” by Stefan Fussan, licensed under CC BY-SA 3.0 DE, via Wikimedia Commons.