Psychology, Not Math, Could Drive the Next Housing Market Shift

Written by:

Rudi Davis

Date:

30 Sep 2025

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Expert argues slight interest rate changes could trigger significant market movement through psychological rather than financial impact.

The current real estate market stagnation might be solved by a surprisingly small interest rate decrease – not because of the mathematical impact, but due to market psychology, according to Brett Riggins, Co-founder of Physician Wealth Systems.

The Psychology of Rate Changes

“I would love to see rates drop just enough to make people get off their hands,” Riggins says, suggesting that even minimal rate decreases could trigger significant market movement. “It may not even be the fact that it’s affecting their offer enough to change the seller’s mind. But maybe it’s more of a psychological thing.”

This observation points to a disconnect between the mathematical impact of rate changes and their psychological effect on market participants.

The Current Market Paralysis

Riggins describes a market currently caught in stasis: “Things are stagnant, prices are still elevated. Things haven’t shifted in buyers’ or sellers’ minds.” This situation has created a standoff between buyers and sellers, with neither side willing to make the first move.

Interestingly, Riggins notes that professional investors aren’t necessarily waiting for rate changes. “I don’t think investors are waiting on interest rates to change because it’s just a part of the equation for us on a smaller scale,” he explains. This suggests the current market paralysis is more driven by individual buyers and sellers than institutional investors.

Breaking the Stalemate

According to Riggins, even a modest rate decrease could serve as a catalyst for market movement. “If we’re talking commercial, it’s a little bit different than the residential side, but I would love to see rates drop just enough to make people get off their hands, it could be a quarter, right? It could be a half.”

The Solution Perspective

While Riggins’ firm continues to find opportunities in the current market, he sees potential for increased activity once psychological barriers are overcome. “At 6.5% if I can do my DSCRs, I’m turning my whole portfolio,” he notes, suggesting that many investors are waiting for similar triggers to act.