Some purchasers have been sitting on the sidelines waiting for home prices to hit the bottom. They want to try and guarantee that they are purchasing at the best possible price. While it may or may not be true that prices still may have some room to fall a little there is another larger issue. Should the buyer be concerned about housing prices or the cost of owning the home? The cost of a house is made up of the price and rate of interest they are charged.
The National Association of Realtors released a report that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year: The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009. A buyer who delayed a purchase might feel good that prices have almost remained the same.
However, other news paints a more alarming picture. Freddie Mac released a report which showed that the 30 year fixed rate mortgage was at 5.05%. So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?
The price is the same. It just costs more!! How much more? By sitting on the sidelines for the last 90 days a purchaser will experience the following based on a $170,000. home: A loss of $89.44 a month or $32,198.40 over the thirty year life of the mortgage. And remember this is based on the National Average Home price of $170,000. Bottom line, Even if prices fall a little more, the cost of a home will increase if interest rates continue to go up.
All The Best,
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