Know the Difference Between Cost & Price
Sellers are most concerned with “short term price” – where home values are headed over the next 6 months. As a buyer, you should not only be concerned with price, but also with the “long term cost” of the home.
Many economists point to Brexit (Britain’s exit from the European Union) as the reason interest rates will remain low for the next few months. But Trulia’s Chief Economist Ralph McLaughlin warns this will not always be the case:
“While the departure of the UK from the European Union has driven down the 10-year bond, and thus mortgage rates, we expect them to rebound later in the year as uncertainty over the economic consequences of the departure lifts.”
The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and Freddie Mac all project mortgage interest rates will increase nearly a full percentage point over the next 12 months.
According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.3% over the next 12 months.
What Does This Mean to a Buyer?
Look at this example of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 if home prices appreciate by the 5.3% over the next 12 months:
Real Estate Bottom Line
With lower prices AND low interest rates, let’s discuss if now is a great time for YOU to buy.