Price is the same, it just cost more!!!

Real Estate Agent with Coldwell Banker Residential Brokerage/Coldwell Banker Commercial NRT 30SA0872839 



KCM Blog


The Cost of Waiting for Prices to Fall

Posted: 11 Feb 2011 04:00 AM PST


Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.


The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.


The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

"Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week...As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010."

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

Let's show you what the news means:

By sitting on the sidelines for the last 90 days a purchaser lost:

  • $89.44 a month
  • $1,073.28 a year
  • $32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

 reprinted from Keeping Current Matters

Thomas Santore
Associate Broker
Coldwell Banker

 Westchester County Real Estate

Visit My Web Sites at;

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Art Hademan
Century 21 Real Estate Center - Mount Vernon, WA

Yup, this is all true but a lot of the fence sitters are still sitting with their fingers crossed that things will continue to go down.

As you point out, it's just going to cost more!

Good Blog!

Feb 14, 2011 05:52 AM #1
Thomas Santore Lic Associate Real Estate Broker
Coldwell Banker Residential Brokerage/Coldwell Banker Commercial NRT - Yorktown Heights, NY
Realtor®-ABR-Land, Residential & Commercial Sa

Art-Thank you we really need to get this out to the public!!

Feb 14, 2011 05:54 AM #2
Bob Pfeiffer
McBride Kelly & Associates - Tampa, FL


Just saw your blog - linking my fence-sitting buyers to it right now!  Thanks!  By the way, if you know of anyone looking to move to the Sunshine State, refer them to me and I will gladly pay a 30% referral fee on any resulting closed transaction.

Feb 14, 2011 06:16 AM #3
Thomas Santore Lic Associate Real Estate Broker
Coldwell Banker Residential Brokerage/Coldwell Banker Commercial NRT - Yorktown Heights, NY
Realtor®-ABR-Land, Residential & Commercial Sa

Bob-Thanks for reading. If I have anyone looking there I will let you know.

Feb 15, 2011 04:30 AM #4
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Thomas Santore Lic Associate Real Estate Broker

Realtor®-ABR-Land, Residential & Commercial Sa
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