Fewer people signed a contract to buy a home in September than in any month since at least 2010. The National Association of Realtors’ pending home sales index fell 7.3% from August and 11.3% from a year earlier, hitting the lowest level in its data. Every region posted a decline.
In the same stretch, single-family asking rents rose 3.2% over the year, according to Zillow’s rent index, the biggest annual gain since January 2025.
Buyers are stepping back. Renters are not. That combination does not come around often, and how you plan for it matters more than how fast you move.
Here is the rest of the picture. Freddie Mac’s weekly survey had the 30-year fixed averaging 7.40% in mid-October, up from about 6.27% a year earlier. It crossed 7% in late September for the first time since January 2025. The 10-year Treasury touched 5% in mid-September, and the Fed raised its benchmark rate by a quarter point on September 16. (Market averages for owner-occupied conventional loans; investment property pricing differs. Sources below.)
So you will hear the old line again: “Marry the house, date the rate.” Buy the property you want, take whatever rate the market hands you, and refinance when rates come back down.
I want to talk about that phrase, because half of it is smart advice and the other half has hurt a lot of investors over the last few years.
The question every investor on our list is asking is fair: do I still buy? My answer is yes, if the deal works today. Not if it works after a refinance that may or may not come. Let me show you what I mean, and then let me give you some ideas that have nothing to do with getting a loan from us.
If you would rather walk through your own plan than read mine, book a planning call with our team. Bring the markets you are watching and we will run the numbers at today’s rate with you.
The “Date the Rate” Problem Nobody Wants to Say Out Loud
“Date the rate” assumes the breakup is coming. It assumes rates fall, you refinance, and the deal you bought at a thin margin suddenly looks great.
Look at the forecasting record. In January of this year, Fannie Mae’s Economic and Strategic Research Group projected 30-year rates averaging around 6% through 2026 and 2027. By July, that forecast had moved to 6.4%. In August, it jumped to 6.8% for the fourth quarter of 2026, holding there through the first half of 2027.
I am not telling you where rates go next. Nobody can, and that is exactly the point. The smartest economists in housing finance kept revising the same forecast higher all year. If your deal only works when their January forecast comes true, you do not have a deal. You have a bet.
There is a second issue people skip. A refinance is not free. Let’s run it.
Hypothetical illustration only. Not a rate quote or offer of credit. Say you borrow $187,500 at 7.25% on a 30-year fixed. Your principal and interest is about $1,279 a month. Two years later rates drop a full point to 6.25%. After 24 payments your balance is about $183,735. Refinancing that into a new 30-year at 6.25% puts principal and interest around $1,131, saving roughly $148 a month. If closing costs run 3% of the balance (about $5,512), it takes around 37 months just to break even on the refinance.
So in that scenario you would be five years in before the “date the rate” plan actually pays you, and that assumes a full point drop, a clean appraisal, and no prepayment penalty on the original note. Many DSCR and non-QM loans carry prepayment penalties in the early years. Know yours before you count on a refi.
None of this means refinancing is bad. It means the refi is a bonus. It is not the business plan.
The “Marry the House” Half Is Still Right
Now for the half that holds up. You marry the house because the house is what you are actually stuck with. Price, location, condition, rent, taxes, insurance. Those are the variables that decide whether a property pays you for 20 years or drains you for 20 years.
And in a rising rate market, you have more negotiating room on the house than you have had in years. NAHB’s September survey showed 38% of builders cutting prices and 66% using sales incentives, the highest incentive share since last December. On the resale side, NAR reports existing-home supply at its highest level for any September in 11 years.
Prices are giving way in places, too. Zillow’s home value index shows mid-tier single-family values down 11% to 26% from their peaks in 16 larger markets, led by Austin (down 26%), Oakland (23%), New Orleans (20%), and Cape Coral and Fort Myers (18%). Phoenix, Denver, Fort Worth, and Naples are all down 11% to 12%. Another 39 cities and counties are down 4% to 10%. Most of those peaks date to mid-2022.
When rates go up, the house gets cheaper to negotiate. The rate is the one variable you cannot argue with. So spend your energy where you have real negotiating power: the purchase.
How Location Can Beat the Rate
This is the part I want every investor on our list to really sit with. Where you buy can move your cash flow more than any rate change you are waiting for.
Let’s compare two hypothetical rentals, same investor, same loan structure, same 25% down, same hypothetical 7.25% rate.
Hypothetical illustration only. Not a rate quote or offer of credit. Figures are rounded and use full amortization.
Property A: Higher-priced market
- Purchase price $400,000, loan $300,000, rent $2,400
- Principal and interest about $2,047, taxes about $400, insurance about $250
- Total monthly payment (PITI) about $2,697
- Rent covers about 89% of the payment. About $297 a month short.
Property B: Cash-flow market
- Purchase price $220,000, loan $165,000, rent $1,750
- Principal and interest about $1,126, taxes about $275, insurance about $183
- Total monthly payment (PITI) about $1,584
- Rent covers about 110% of the payment. About $166 a month positive before vacancy, maintenance, and management.
Here is the kicker. For Property A to simply break even on PITI, the rate would need to fall to roughly 5.75%. That is a drop of a point and a half, and you would still have zero margin for repairs or vacancy.
Property B works at today’s rate. Not a future rate. Today’s.
That is what I mean by beating rates with location. The ratio of rent to price, plus the local tax and insurance bill, decides your outcome far more than the eighth of a point you might negotiate with a lender.
Falling prices are not the same as good deals
Here is where the new data gets interesting, and where a lot of investors are going to get it wrong.
The markets with the biggest price drops are mostly not the markets with the strongest rent growth. Austin values are down 26% from peak, but Zillow’s rent index shows Austin single-family rents up just 1.8% over the past year and apartment rents up 0.3%. A lot of new supply is still working its way through that market. Denver, Houston, and Tampa apartment rents are actually down slightly from a year ago.
Now look at the other end. Single-family rents rose 4.6% in St. Louis, 4.3% in New York, 4.2% in Chicago, and 4.1% in Cincinnati over the same period. St. Louis and Cincinnati are both up more than 50% since January 2020.
A 26% discount on a house whose rent is flat may still not cash flow at 7%. A smaller discount in a market where rents are climbing may cash flow today and get better every lease renewal. Price is only half of the ratio. Always run the rent side with the same discipline.
The math will not lie.
What to look for in a cash-flow market
You do not need anybody’s “top 10 markets” list. You need a filter you can run yourself.
- Rent-to-price ratio. Divide monthly rent by purchase price. Many Midwest and Southeast metros (Memphis, Cleveland, Indianapolis, Birmingham, Kansas City, and St. Louis show up on most cash-flow lists) still land between about 0.6% and 0.9%. Many coastal and mountain markets sit well under 0.5%. That gap matters more as rates rise.
- Insurance, quoted before you offer. Insurance is no longer a rounding error. Average 2026 homeowner premiums range from under $1,000 in some states to more than $8,000 in Florida, according to Insurance.com. One analysis of landlord policies estimates insurance eats about 13.7% of gross rent in the median state and more than a third in Louisiana. Get a real quote during due diligence, not after.
- Property tax and reassessment. Some counties reassess to your purchase price. Your taxes after closing may not match the seller’s bill. Call the county assessor or check their website.
- Supply pipeline. Heavy new construction can flatten rents. Austin is the cautionary example: values down 26% from their 2022 peak while rents barely moved. Look at permits, not just headlines.
- Jobs and population. Rent growth follows paychecks. Look for diverse employers, not one big plant.
- Landlord-tenant law. Eviction timelines and rent rules vary widely by state and city. A great rent-to-price ratio means less if a bad tenant costs you six months.
Seven Moves That Work in a Rising Rate Market (Some Have Nothing to Do With Us)
I promised you advice that is not about getting a loan from Ridge. Here it is. Use it whether or not we ever work together.
1. Underwrite at today’s rate, plus a cushion. If the deal cash flows at today’s rate with room left for vacancy and repairs, you are buying a business. If it only works after a refi, walk.
2. Negotiate price first, then decide how to use seller money. A seller credit can go to a lower price or to buying down your rate. They do different things. On a hypothetical $250,000 purchase with 25% down, a $7,500 price cut lowers principal and interest by only about $38 a month. If that same $7,500 could buy a permanent rate reduction of about one point (pricing varies daily and by lender), the payment could drop around $125 a month. But if you plan to refinance or sell in two or three years, that buydown money may never pay back. Match the tool to your hold period.
3. Read the fine print on builder rate offers. Some builder rates are temporary buydowns or adjustable products. Ask whether the advertised rate is fixed for the full term. If it is a 2-1 buydown, underwrite at the note rate, not the teaser.
4. Shop more than one lender. Seriously. Get Loan Estimates from at least two or three lenders and compare them line by line, including points, lender fees, and prepayment terms. A good lender will welcome the comparison. We do.
5. Look beyond the big national lenders. Local credit unions and community lenders sometimes hold investment loans in their own portfolio with terms you will not find elsewhere. Seller financing is also back on the table with sellers who own free and clear and cannot get their price. A real estate attorney should paper any seller-financed deal.
6. Consider house hacking if you are early. Living in one unit of a two to four unit property can open owner-occupied financing with lower down payment options and pricing than a pure investment loan. It is still one of the cleanest on-ramps into this business.
7. Protect your reserves. Rising rates often travel with rising insurance, taxes, and repair costs. Six months of PITI per property in reserves is a reasonable floor. Reserves are what let you hold through a rough patch instead of selling into one.
So Should You Buy Right Now?
Here is my framework.
Buy if: the property cash flows at today’s rate, you have negotiated the price hard, you have real quotes on insurance and taxes, and you have reserves left after closing.
Wait if: the deal only works with a refinance, you would be draining your reserves to close, or you are stretching into a market where rent barely covers the payment and hoping appreciation fills the hole.
Change markets if: your local area does not cash flow at today’s rates. That is not a failure. That is information. Plenty of our investors live in high-cost areas and own rentals somewhere else entirely.
If rates do come down later, great. A deal that already works gets better. That is the right way to date the rate: as upside, never as the plan.
Frequently Asked Questions
What does “marry the house, date the rate” mean?
It means buy the property you want now and refinance later if rates drop. The house is permanent; the rate can change. The risk is that rates may not drop when you expect, and refinancing has costs.
Is it smart to buy investment property when interest rates are rising?
It can be, if the property cash flows at today’s rate. Rising rates often reduce buyer competition and increase seller and builder concessions, which can improve your purchase price.
How can location offset higher mortgage rates?
Markets with higher rent relative to price, along with reasonable taxes and insurance, can produce positive cash flow even at higher rates. In our hypothetical comparison, moving to a cash-flow market improved monthly cash flow more than a 1.5-point rate drop would have.
Should I use a seller credit for a price reduction or a rate buydown?
It depends on your hold period. A permanent buydown usually lowers the payment more per dollar, but if you plan to refinance or sell soon, a price reduction or closing cost credit may serve you better. Run both scenarios.
Is it a good time to buy rental property while home prices are falling?
It can be, but only where rents are holding up. Falling prices improve the purchase side of the math, yet several markets with the steepest price drops also have the weakest rent growth. Compare local rent trends against price trends, and make sure the property cash flows at today’s rate before you buy.
How long does it take to break even on a refinance?
Divide total refinance costs by monthly savings. In our hypothetical example, a one-point drop with 3% closing costs took about 37 months to break even.
Let’s Build Your Plan
Quiet markets are when plans get made. If you are mapping out your next purchase, weighing a market you have never invested in, or wondering whether a refinance actually makes sense on a property you already own, that is what we do all day. Bring a deal, a market, or just a question. No pressure, no pitch. We will run the math with you, and if the right answer is “don’t buy this one,” we will tell you that too.
Book Your Planning Call | See the Math
Sources: Freddie Mac Primary Mortgage Market Survey (weekly averages, October 2025 through October 2026); Fannie Mae Economic and Strategic Research Group forecasts as reported by Scotsman Guide and National Mortgage News (2026); NAHB/Wells Fargo Housing Market Index, September 2026; Insurance.com 2026 state homeowners insurance premium data; RentalRealEstate.com 2026 landlord insurance analysis; National Association of Realtors Pending Home Sales Index and existing-home inventory, September 2026; Zillow Home Value Index and Zillow Observed Rent Index, as reported by Wolf Street (October 2026); Federal Reserve FOMC statement, September 16, 2026.
All examples are hypothetical, for educational purposes only, and are not a commitment to lend or an offer of credit. Rates, terms, and payments vary based on credit, property, loan amount, and market conditions. Payments shown include principal, interest, taxes, and insurance only and do not include HOA dues, mortgage insurance, vacancy, maintenance, or management. Consult your tax and legal advisors.
