With interest rates hovering in the 4's*, buying power has never been better. If a buyer locks in a rate for 4.5% today on a sales price of $200,000 and putting 5% down, their principal and interest payment would be approximately $962.70 (not including taxes and insurance).
If interest rates go up even just 1%, to finance the same amount, the montly payment would jump to $1,078.80.
Now lets say, at 5.5%, that you wanted to keep the principal and interest payment at around $962.70. The sales price of the house you could buy would now be $178,500. WOW. That's the difference in sales price of over $20,000.
Now let's say that prices go down over the next few years, as much as 3 percent. Let's say you bought that house for $200,000, and got the interest rate at 4.5%. That would put the value at $192,000.
If you were to wait until the house dropped in price to $192,000, and the interest rates had risen to 5.5%, that would put your note at $1035.65. So even if your house were to drop in value by 3 percent, your note is still less than if you waited to purchase and rates went up by one percent.
The leverage buyers have now with interest rates is pretty powerful. Interest rates won't be this low forever, which is why buyers should act now to take advantage.
*this is not a rate quote by a lender, please consult a mortgage lender for any rate quotes. subject to credit scores and rates subject to change at any time.