Why Waiting for a Crash Is Wrong: 6 Questions Every Buyer and Seller Asks

If you're waiting for the housing market to crash so you can swoop in and buy cheap, you're probably going to be waiting a long time. Negative equity is at 1.9% of mortgaged homes (CoreLogic), prices are still rising in most metros (NAR), and the median age of first-time buyers just hit a record 40 (NAR Generational Trends). That's not a market about to implode—it's a market that's stuck. Let's clear up the myths and give you straight answers to the questions I hear most.

1. Should I wait for prices to drop?

No. The national median existing-home price in July 2026 was $431,400, and it's been basically flat for a year (NAR Existing-Home Sales). Prices aren't falling; they're stagnating. In Q1 2026, prices rose in 71% of metros (NAR). Sure, some places like Austin fell 6.9% (FHFA HPI), but those are the exception, not the rule. Waiting for a broad crash ignores that we're already in a slow, grinding plateau—and in many areas, prices are still climbing. If you're waiting for a repeat of 2008, you're waiting for something that the data says isn't coming.

2. Can I really buy with 0% down?

Yes—if you qualify for a VA or USDA loan. VA loans let eligible veterans and service members put 0% down, and USDA loans do the same for buyers in eligible rural and some suburban areas (Bankrate). But don't forget the fees. VA charges a funding fee of 2.3% for first-time purchases with no down payment (though it's waived for veterans with disability compensation) (VA). USDA charges a 1% upfront guarantee fee and a 0.35% annual fee, and your income generally has to be at or below 115% of the area median (USDA Rural Development). So yes, 0% down is real—but it's not a free lunch.

3. Is PMI a waste of money?

It's not ideal, but it's not the villain it's made out to be. Conventional loans with less than 20% down typically require private mortgage insurance (Bankrate). But here's the thing: you can cancel it. Under the Homeowners Protection Act, you can request cancellation once your equity hits 20%, and your lender must automatically terminate it at 22% (CFPB Homeowners Protection Act). So if you're putting 10% down, you're not stuck paying PMI forever—you just need to track your equity and make the call. Compare that to FHA loans, where mortgage insurance lasts for the life of the loan if you put down less than 10% (FHA/HUD). That's a real difference.

4. Should I buy points or take a higher rate?

It depends on how long you'll stay. A discount point is 1% of the loan amount, paid upfront to lower your rate (CFPB Points). On a $300,000 loan, one point costs $3,000. If you're staying 10 years, buying points can save you thousands. If you're moving in three, you'll never recoup the cost. Also, some lenders offer conventional loans with low down payments and no PMI in exchange for a higher rate (CFPB PMI)—compare the total cost, not just the monthly payment. My rule: if you're not staying at least five years, skip the points.

5. Are ARMs a bad idea right now?

Not necessarily. With the 30-year fixed averaging 6.67% in August 2026 (Freddie Mac), an ARM might seem scary, but it comes with rate caps. Caps typically limit the first adjustment to 2% or 5%, later adjustments to 1% or 2%, and the lifetime cap to about 5% (CFPB ARM Rate Caps). So if you start at 5%, your rate can't go above 10%—even if rates spike. If you're planning to move in five to seven years, an ARM can save you money. Just know what you're getting into.

6. What's the real deal with closing costs?

They're higher than most people think. Plan on 2% to 5% of the purchase price (Bankrate). That's $8,000 to $20,000 on a $400,000 home. But you can negotiate—sellers can contribute up to 6% on FHA loans (FHA/HUD), which is more generous than conventional. And remember, your lender must give you a Closing Disclosure at least three business days before closing (CFPB). Read it. Question it. That's your last chance to catch errors.

What I'd actually do

Here's my blunt advice: If you're a buyer with a stable job and a 5+ year horizon, buy now—but be smart. Put down at least 10% if you can, use a conventional loan so you can cancel PMI, and negotiate seller concessions to cover closing costs. Don't wait for a crash that isn't coming. If you're a seller, price realistically. The market is slowing—inventory is at a 4.6-month supply (NAR Existing-Home Sales), and builders are cutting prices (35% did in August, by an average of 6%) (NAHB HMI). Overpricing will leave you sitting. In a flat market, the first mover wins.

Sources

• Bankrate - https://www.bankrate.com/mortgages/how-to-buy-a-house/
• NAR - https://www.nar.realtor/press-releases/home-prices-increased-in-71-of-metro-areas-in-first-quarter-of-2026
• Freddie Mac - https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-average-667
• CFPB Homeowners Protection Act - https://www.consumerfinance.gov/compliance/supervision-examinations/homeowners-protection-act-hpa-or-pmi-cancellation-act-examination-procedures/
• VA - https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/
• NAHB - https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index