Downsizing Done Right: Tips for Empty Nesters – Part 3: The right move on interest rates

Downsizing Done Right: Tips for Empty Nesters – Part 3: The right move on interest rates

Trying to perfectly time the real estate market is as difficult as timing the stock market or NASDAQ. You can’t predict the exact top or bottom, but you can watch key indicators and position yourself to ride the wave when conditions improve. For empty nesters in the Minneapolis Saint Paul metro area—especially in the south metro (Lakeville, Apple Valley, Eagan, Burnsville, Bloomington, and surrounding communities)—interest rates and market timing are two of the biggest factors that can add (or subtract) tens of thousands of dollars from your net proceeds and next purchase.

Current Interest Rate Reality (Early 2026)

A year and a half ago, 30-year fixed mortgage rates peaked around 8%—the highest in over 20 years.
Today (early 2026), rates are averaging 5.8%—a significant drop.
Many experts expect rates to continue trending toward 5.5% or lower in 2026 as economic conditions stabilize and policy shifts (like government bond purchases) take effect.

If your current home is mortgage-free, lower rates don’t directly affect your sale proceeds—but they do make your home more affordable for incoming buyers, increasing demand and potentially pushing your sale price higher. If you still have a mortgage (e.g., at 3.5%), selling now and buying a smaller home at today’s lower rates can still be a net win, especially if you’re downsizing significantly.

Why Timing Matters for Empty Nesters

Lower rates = more buyers: The last three years of higher rates (6–8%) priced many people out. A drop to 5.5% or below creates a sweet spot where more buyers can qualify, demand rises, and homes sell faster and for more.
Spring market momentum: In the Twin Cities, buyer activity typically surges in late winter/early spring (often around February/March). Listing early (January–February) lets you capture the wave before inventory floods in April–May.
Avoid the double-whammy: If you wait too long, you risk selling into a saturated market (more competition from other downsizers) while buying into rising prices if rates stabilize.

The goal: Sell when buyer demand is strong (lower rates + spring surge) and buy your next smaller home before multiple-offer situations return.

Practical Tips for Empty Nesters Timing the Market in 2026

Monitor weekly mortgage rate trends (Freddie Mac, Bankrate, or your loan officer).
Track absorption rate and inventory in your city (low inventory + falling rates = seller’s market).
If you’re mortgage-free, consider listing early to lock in high buyer demand.
If you have a low-rate mortgage, run the numbers: Sell now, buy smaller at current rates, and pocket equity.
Work with an agent who watches both markets—your sale price in Lakeville and your purchase price in your next location.

Timing won’t be perfect, but waiting for lower rates and strong buyer demand can maximize your sale price and make your next home more affordable. Downsizing isn’t just about a smaller house—it’s about timing the market to your advantage.If you’re an empty nester in Lakeville, Apple Valley, Eagan, Burnsville, Bloomington, or the south metro thinking about downsizing in 2026, let’s talk. As a real estate agent in Lakeville MN with over 20 years helping sellers and buyers time the market, I’ll give you an honest assessment of where rates and inventory are headed and help you plan your move for maximum benefit.Ready to time your downsizing move right in 2026? Text or call me today, Tom Sommers with Coldwell Banker Realty, for a free, no-obligation consultation. Let’s make sure you sell high and buy smart.