• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!

Buying a Home: The Cost of Waiting

Buying a Home: The Cost of Waiting

Whether you are a first time buyer or a move-up buyer, you should look at the projections housing experts are making in two major areas: home prices and mortgage rates.

PRICES

Over 100 economists, real estate experts and investment & market strategists were recently surveyed. They were asked to project where home prices were headed. The average value appreciation projected over the next twelve month period was approximately 4%.

MORTGAGE INTEREST RATES

In their last Economic & Housing Market Outlook, Freddie Mac predicted that 30 year fixed mortgage rates would be 4.8% by this time next year. As of last week, the Freddie Mac rate was 4.14%.

What does this mean to you?

If you are a first time buyer currently looking at a home priced at $250,000, this is what it could cost you on a monthly basis if you wait to buy next year:

First Time Home Buyers Cost of Waiting | Keeping Current Matters

If you are a move-up buyer currently looking at a home priced at $500,000, this is what it could cost you on a monthly basis if you wait to buy next year:

Move-Up Buyers Cost of Waiting | Keeping Current Matters

Bottom Line

With both home prices and interest rates projected to increase, buying now instead of later might make sense.

__________________________________________________________________

Summer 2014 | Things to Consider When Buying a Home | Keeping Current MattersATTENTION: If you are a real estate agent looking for more information to share with your buyers as to why now is a great time to purchase, sign up for a Free 14 Day Trial of KCM and download the Summer Edition of our 11-page eGuide,Things to Consider When Buying A Home.  


Members: Sign in now to set up your Personalized Posts & start sharing today!

Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts.

7 replies
  1. Mike
    Mike says:

    This is the same Freddie Mac who predicted in June of 2013 that we would be at 4.4 on a 30 year mortgage by today. Beware of so called “experts” and the lack of accountability they have to consumers. Fear as a sales tactic is dead. Consumers are on an equal basis. It used to be “Buyer Beware”…. now it should be “Seller Be Aware”..

    Credibility has a higher standard in the tech age where all have access to info. Work harder to deliver value.

    Reply
    • Steve Harney
      Steve Harney says:

      Mike,

      Great point about trusting the projections by experts. No one knows for sure what the future will bring.

      However, if our readers ask whether they should buy now or wait, whose projections do you suggest we use?

      As far as using fear as a ‘sales tactic’, the blog is free and no one working at KCM has a real estate license (meaning we don’t list nor sell real estate). Not sure what you think we’re trying to sell the real estate consumer.

      We are just trying to give the best advice we can on the current housing market to our 100,000+ monthly readers.

      Reply
      • Jim Swanson
        Jim Swanson says:

        Steve.

        KCM is doing a great job getting the data put together for us to share. I am a Realtor and although I do agree with Mike that predictions have not really gone the way they were expected, KCM has not been the one making predictions. As a Realtor I do share your information with my own spin/disclaimer regarding past predictions. I let folks know the experts have not been too accurate in the past, but since rates going up makes perfect sense, we need to keep that possibility in our thoughts.

        The reality for me is that there is going to be a point where home affordability will suffer and then we will see a market shift of sorts. There is so much that goes into knowing what is going on in the economy that it may be impossible to truly make accurate predictions. We recovered “jobs” but those jobs are not paying wages equal to the ones we lost.

        As for “fear tactics”, I do not use them. I think maybe a small part of our real estate community uses them, but if “we” do not educate our clients with the “what-ifs” and the that stuff happens…. well then we are called names too. We have to do the best job we can for our clients so that they are successful. Only then will we be successful.

        Thanks Steve!!!!

        Reply
    • Jon
      Jon says:

      I would ask you Mike; if we as Realtors don’t use the predictions of economic experts in our field what then would we use when someone asks us a question about buying next year? or next month? A crystal ball?

      No one has that answer, period. Scare tactics, hardly. How about we call it information. The truth is that interest rates have been artificially low for some time. They may not go up, but they might. Predictions are just that. Educated guesses.

      Currently, a conventional loan here in MN for someone with a credit score above 750 is roughly 4.125%. For others it will be higher. I would say, considering the myriad factors that have an affect on long term interest rates, that’s not too bad for a guess.

      Geez, I hope you don’t write letters to your local weather guy….

      Reply
    • Clint
      Clint says:

      Mike, we’re not that far off from the 4.4 on the 30 yr and some borrowers are higher than that pending their loan level pricing adjustments. Rates are rising, no question about it over the long trend (6 months plus time line.) There are little dips and spikes in the short run, days to weeks, but those that I told to buy in Spring of 2013 when rates were in the mid to low 3% range are kicking themselves for holding out. We haven’t broken back below 4.125% w/out paying for it on 30 year money since May of last year, buying now makes more sense than holding off assuming the numbers work for you now. Holding off too long will greatly increase the price of the home as well as the cost of the money used to purchase it and it will have a crippling impact to buying power. It’s not a matter of “if,” it’s a matter of “when.”

      Reply
  2. mary.payne@homestreet.com
    mary.payne@homestreet.com says:

    KMC – I live in a market (Spokane, WA) where the average home price is less than what is always used in your graphs and examples. My first time buyers are in the $80,000 to $150,000 range – NOT the $250,000 example above. And our Move Up Buyers are more like $200,000 to $300,000 – NOT the $500,000 to $520,000 above. It’s frustrating that your graphics always depict scenarios way out of reach for many markets. Could you create graphic selections based on different markets? I realize the dollar increase in payments would not be as dramatic, however it would still make an impact on the consumer in their price range. I love your content and find it very practical, but it does many of us no good because we can’t share it and have it hit home (no pun intended) for our readers. Please consider this as you are creating content.

    Reply
    • The KCM Crew
      The KCM Crew says:

      We use average home prices nationally to be able to cover as many markets at possible. We completely understand your concern, which is why as a KCM Member we have broken this information down into various price points in this month’s KCM Market Report. Once you log in you’ll be able to see that $100K price point broken down on slide 18.

      Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *