Published 08/05/2026
Video: 1031 Exchanges in a High Interest Rate Market
TRANSCRIPT
If you’re thinking about a 1031 exchange in today’s market, one of the biggest questions is how interest rates affect your next move. Higher rates can change the math. They reduce purchasing power, increase borrowing costs, and make financing more important to the overall transaction structure.
My name is Ashley Stefan. I’m Counsel for First American Exchange Company, and I’m here to help investors like you understand how to navigate evolving 1031 exchange market conditions.
How interest rates affect purchasing power and financing strategies.
High interest rates don’t just mean a 1031 exchange isn’t a smart move. It just means strategy matters more.
Property selection has more impact in tighter markets.
When you’re buying replacement property in a high rate market, it’s important to look beyond just meeting the exchange deadline. Evaluate whether the replacement property supports long-term goals, produces enough income, and fits the financing plan.
In a tighter market, quality replacement properties can be harder to find, and higher borrowing costs can leave less room for error. And, a property that looked attractive in a lower-rate environment may not perform the same way today.
Common mistakes investors make when rushing a deal.
Higher interest rates can make replacement property decisions more complex as financing terms shift, cash-flow assumptions tighten, and available options feel more limited, especially within a 1031 exchange timeline. But even when time is short, diligence matters.
Rushing can lead to weak property selection, financing surprises, or replacement asset sthat don't align with your broader strategy. This is where planning early can make a real difference. Working with a Qualified Intermediary early in the process gives you more time to evaluate your options, coordinate with lenders and advisors, and structure the exchange with more clarity.
Remember, market conditions change, but the fundamentals of a successful exchange don’t. If you’re considering a 1031 exchange, now’s the time to understand your options before market pressure starts making decisions for you.