HOUSING PRICES INCREASINGThe vast majority of real estate industry experts have projected that U.S. national housing prices will increase in value by at least 5% in 2013. Accordingly, the graphic below illustrates the increased amounts that buyers will pay if they wait to purchase a home.
INTEREST RATES RISING
Now suppose this increased expense is coupled with the increase in interest rates anticipated by the vast majority of economic experts. Industry economists predict that rates will rise to a level anywhere between 4.5% and 5.5% by the end of 2013, and to even higher levels in the years to follow. Based upon the impact that even slight increases in interest rates have on monthly payments as shown below, it is clear that buyers can't afford to wait in this market!
EVEN SELLERS LOSE BY WAITING
Homeowners often place too much importance on the proceeds they will receive from the sale of their current home and completely ignore the increased price they will pay for a new home. If they wait for their current home to appreciate in value before selling, the price of the home they will be purchasing in the future will increase as well.
More importantly, sellers often completely ignore the much more significant actual cost they will pay for their new home over time once mortgage interest payments are factored in. The graphic above illustrates how much a $100,000 home’s monthly payment increases by slight increases in interest rates. Now imagine a $200,000 or $300,000 home, with payments being made over the typical term of a 30 year loan!