We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about “short term price” – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home.
Let Us Explain
Recently, we reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 4% from now to the end of 2015.
Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.0% by the end of next year.
What Does This Mean To A Buyer?
Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:
While today is a great time to sell, because of the lack of inventory, and the record high prices, todays rates are also really low! Not record low, but they are historically much lower than the average. Many reliable sources say that next year rates will go back up to 5%, which would be about a 1% increase from today’s rates. This increase, along with next years value increase, is going to cost you about $180 more per month, on just a $312k purchase. Most of us are in areas that would require 2 to 3 times that purchase price, costing you $380 to $540 more per month, by waiting until next year to purchase.