While we hear in the media that it is a buyers market, it should be playing to a buyer's advantage. Buyers, who should be swooping in to make the most of stable housing costs and favorable interest rates, are sitting by, waiting.
While prices have leveled and in some areas home prices may drop, it is likely that any decreased prices will be accompanied by increased financing costs due to rate cuts by the Fed. This means that any money saved on paying less for a house in a few months time will be offset by having to pay a mortgage at a higher interest rate make the "playing the waiting game" a waste of time (and very little fun.)
This rate increase isn't just speculation. Just a couple of weeks ago, in early February, the fixed m ortgage rate jumped a full half-percent, making it the fastest increase in 20 years.
The table below demonstrates how even as home prices drop, monthly mortgage payments basically stay the same due to increase interest rates:
Scenario 1:
Prices decrease by 5% and interest rates increase by 0.5%.
Scenario 2:
Prices decrease by 10% and interest rates increase by 1%.
Today |
Scenario 1 |
Scenario 2 |
|
Home Price
$218,900
|
Home Price: -5%
$207,955
|
Home Price: -10%
$197,010
|
|
Interest Rates
6.04%
|
Interest Rates: +.05%
6.54%
|
Interest Rates: +1%
7.04%
|
|
Monthly Payments
$1054
|
Monthly Payments
$1056
|
Monthly Payments
$1053
|
Since the interest rate is still hovering around 6%, get out and buy today!!
;)
;)
