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Home Buyer

What If I Wait Until Next Year To Buy A Home?

If you're thinking about selling, you may be most concerned about 'short term price' - where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the 'long-term cost' of the home.

Let us explain.

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 will happen over the next 12 months?

According to CoreLogic's latest Home Price Index, prices are expected to rise by 5.5% by this time next year.

Additionally, 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 demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

Let me explain.

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 will happen over the next 12 months?

According to CoreLogic's latest Home Price Index, prices are expected to rise by 5.5% by this time next year.

Additionally, 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?

Below is a chart that illustrates what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today (just an example).  If you wait a year to buy a home and include a higher interest rate, the difference in your monthly payment is $188.  That may not sound so bad, but when you look at $188 x 12 months, you're spending an extra $2,262.00 annually by waiting.  When you apply that number over the life of the loan (example 30 years), the number is $67,860. They say hindsight is 20/20, I'd like to think that 30 years from now when you're 60, looking back, you would say to buy now!!

Cost of waiting to buy a home chart

Author:  Kirsten Hamling