My last blog post addressed interest rate trends and predictions. In any case, as interest rates increase, the monthly cost for the same price home increases.
However, if we are in a vicious cycle and house prices continue to decline due to the economy, etc., the near term (now through 2011 or 2012) may continue to be a buyer’s market. If jobs return and the economy trends up, significantly, the market opportunities will quickly disappear.
Buyers are waiting for home prices to decline even further. Waiting on further market decay for a better deal may not be the best strategy if offset by interest rates trending up. If you are on the fence thinking about buying a home or a real estate investment, you will not time the housing bottom and get hammered with interest rates. Your COSTS will go UP!
The above is an overview of the industry and the local market should rule your decision.
Let’s go along with the Case Shiller prediction as illustrated.
March 2010 Today’s Price at $159,000 @ 5.11% Monthly Mortgage payment of $864.27
May 2011 Projected Bottom Price at $148,000
Projected Interested Rate on May 2011 @ 6.26% Monthly Mortgage payment of $912.22
So…….. WHY would someone wait over 1-year so housing prices bottom out and pay more per month because interest rates will trend up?????????
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