On The Fence On Buying

There are many factors on the real estate market but one of the main driving forces are interest rates. If rates go up, that equates to less purchasing power for buyers which can put pressure on values with price reductions. I just read another article on rates versus price reduction. I don't have a link so I'll just copy and paste it below:

Rate versus Price Reduction

Everyone wants to get the best deal when buying a home. However, for potential buyers who are waiting to see if home prices come down a little more, the wait could cost them. Let's look at an example to see why.

Say a homebuyer wants to buy a home that costs $600,000. But the buyer wants a better deal on the home, so she delays a transaction until the home is reduced by $20,000. If, in the meantime however, rates were to rise .75% to 4.75% and the buyer financed 90% of the purchase price, the amount of total payments over a 30-year term would be over $85,000 more than paying the $600,000 purchase price and locking in the 4% interest rate. In other words, the buyer would save $10,000 only to end up paying $85,000 more.

Now these prices and rates are just for the sake of example as depending on the product, they can vary. But the point is that sometimes waiting for a home price to reduce may end up costing homebuyers much more than they expect if rates rise.

Before rates go up, they should strongly consider buying now.