When thinking about buying a home, it’s easy to get stuck on timing.
“Should I wait for rates to drop?” “What if prices fall?”
“Is it a buyer’s market or a seller’s one?”
These are valid questions, and ones we hear often. That’s where the phrase “marry the house, date the rate” comes in. The idea is simple: the home is what’s chosen for the long haul. The location, the layout, the way the light hits the living room in the afternoon – those are the things that last. Interest rates, on the other hand, can change. Refinancing becomes an option when the timing makes sense.
For the moment, there are some favorable conditions for buyers. We’re seeing more inventory, and less bidding pressure. Even though rates are still on the higher side, there are creative financing tools available that can help bridge the gap.
Don’t wait to buy real estate, buy real estate and wait. Let’s dive into a few stats to help explain why this moment might be working in buyers’ favor.
Inventory is Up, Competition is Down
If you’ve been watching the market lately, you may have noticed inventory has increased. Year-to-date, 2025 has seen 10,428 new listings across San Diego County compared to 9,252 this time last year. That’s a 12.7% increase according to SDMLS stats.
Pending sales have slowed down a bit, and average days on market have increased. Data shows more homes are now selling below their original asking price.
So, what does that all mean? For buyers, it creates a little more space to negotiate, explore options, and make decisions without feeling rushed. For sellers, it means understanding the current market and being open to negotiation – whether it’s on price, contingencies, or creative financing. The most strategic sellers are finding ways to make their homes stand out and attract serious buyers.
A Tool for Today’s Market: The 2-1 Buydown
One financing tool that’s become popular is the 2-1 buydown.
A 2-1 buydown is a financing arrangement where the seller or lender pays a lump sum at closing to temporarily lower the buyer’s monthly mortgage payments for the first two years. According to Prosperity Mortgage, the interest rate is reduced by 2% in year one, 1% in year two, and returns to the original fixed rate by year three.
Why It Works for Buyers
One of the biggest hurdles for buyers right now isn’t just the interest rate itself, but how that rate affects monthly affordability. The 2-1 buydown helps ease that pressure by lowering payments for the first two years, giving buyers room to settle in to a new home with more confidence. If rates drop over the next two years, homeowners can refinance and secure a lower long-term rate.
So how does that play out in real numbers? As an example, let’s say a buyer purchased a home for $800,000 with 20% down. (Of course, these numbers can be adjusted to reflect the desired pricing). On a standard 30-year fixed loan at 6.75%, the monthly payment would be about $4,151. With a 2-1 buydown, that same loan starts with a 4.75% rate in year one, dropping the monthly payment to $3,338. In year two, it adjusts to 5.75% with a $3,734 payment. By year three, it’s back at the full rate and monthly payment.
See example chart below from Prosperity Mortgage:
The buyer can still lock in the loan, but the seller covers the difference in monthly payments upfront (in this example, a $14,760 contribution). Then, if interest rates drop in the next couple of years, the buyer can consider refinancing.
Why It Works for Sellers
For sellers, the 2-1 buydown can be a smart alternative to a price reduction. If the home has been sitting on the market longer than expected, this strategy offers a fresh way to attract serious buyers without lowering the asking price significantly. It helps the property stand out by easing the monthly cost for buyers, which can lead to more interest, stronger offers, and a faster sale.
Here’s a quick example to compare offering a price reduction versus a 2-1 buydown. Using the same $800,000 purchase price, a seller might be considering lowering the list price by $40,000 to spark buyer interest. But with a 2-1 buydown, the seller could offer to pay just $14,760 toward the buyer’s loan instead—and give the buyer even greater savings over the first two years.
In this case, the 2-1 buydown provides more immediate value for the buyer while costing the seller significantly less.
(Chart provided by Prosperity Mortgage.)
Final Thoughts: A Market Worth Exploring
While some buyers are still sitting on the sidelines waiting for rates to drop, it’s worth considering what could happen when they do. If rates were to fall to 5% or lower, we could see a surge of demand flood back into the market, reigniting competition and nudging prices upward.
Buying now means having more options to explore, and the ability to negotiate from a stronger position. Creative strategies like a 2-1 buydown can help make the numbers work in the buyer’s favor, while still allowing the flexibility to refinance later if rates improve.
If you’re curious about what this market shift could mean for you, we’re always happy to talk it through. If the 2-1 buydown sounds like something worth exploring, we can point you to our trusted contact at Prosperity Mortgage. They have tools and calculators that break it down in a really clear way. In a market that’s always changing, the key is staying informed and open to what’s possible.
Disclaimer: This blog is meant to share insights we’ve learned through experience and trusted industry contacts. We are licensed real estate agents, not attorneys, mortgage lenders, or financial advisors. The information provided here is for general informational purposes only and should not be considered legal, financial, or lending advice. Always consult with a qualified mortgage professional, financial advisor, or attorney before making decisions related to financing or real estate transactions. Loan products, rates, and terms are subject to change and may not apply to all borrowers.