Everyone knows that if you have a house in a great location, let's say on a pretty cul-de-sac with lots of trees and just a few neighbors in a town with a great school system and easy access to transit, then that house would be worth more than a house that backs up to the train tracks on a major street in the same town.  As you've probably heard that's the old maxim, location, location, location.

So the second house would take longer to sell right?  Well, not necessarily.

Real estate, like any other commodity is driven by consumer demand, in other words, the potential buyers are the one's who drive the prices.  We have recently seen the prices in the stock markets all over the world drop.  The simple reason is that more people are keeping their money in liquid assets; therefore, they are removing their money from less liquid markets and causing prices to drop.

In any market, it is the buyer's who drive the prices, even in a seller's market.  So the best way to get the best price in a falling market, of any kind, is to price the commodity, i.e. your house, where the buyer's will feel that it has the best value.  So, if the house on the train track is priced where the buyer still feels that they are getting a good value, then it will sell before the house on the pretty cul-de-sac.

If you are afraid to buy a house while interest rates are at all time lows and real estate prices are on the decline, it could cost you thousands.  The sad thing is that you won't know it until it's too late.

Hindsight is always 20/20.  A few years ago you couldn't buy a house in our area of the country for $350,000 unless you were a contractor who could fix the house up for cost. 

Today, there are plenty of houses available at this price and lower that aren't teardowns.  This is a fabulous opportunity for so many people who thought that homeownership was out of reach for good. 

Let's take a simple example:

If you purchase a house for $350,000 with 3% down at an interest rate of 5%, then your monthly payments for principle and interest would be $1822.51 per month and your interest over the life of the loan would be $316,605.18.  If prices decline another 10% over the next year (we don't know if this will happen and it depends on what occurs in your local market), then that same house would sell for about $315,000.  Taking the same assumption of 3% down, but an interest rate of 6%, the monthly payment would be $1831.93 per month and your total interest over the life of the loan would be $353,945.38.  Let's take it a step further, if the interest rate goes up to 7%, then your monthly payment would be $2032.83 and your total interest would be $426,271.23. 

Waiting, depending on what happens with interest rates could cost you thousands, somewhere between $37,000 to $110,000 over 30 years.  Now, that's a lot of lattes!

But the kicker is that you might not qualify for that possible 7% loan in a year or two. You would have also missed out on the benefits of the tax deductions for interest and homeowner taxes paid over the year or so that you spent sitting on the fence.