If you are wondering if it is wise to wait until next year to buy a home, you must look into not only price but also the ‘long term cost’ of the home. As a seller, you will be most concerned about ‘short term price’ – and where values are headed over the next six months.
What does it mean?
There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.
What about the next 12 months?
Corelogic’s latest Home Price Index indicate that prices are expected to rise by 5.5% by this time next year.
In addition, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will appreciate to 4.5% in that same time.
What does this mean to a buyer?
Here is a simple visual of what kind of impact these projected changes can have on the mortgage payment of a home selling for approximately $250,000 today:
