Waiting until the market drops before you purchase could actually cost more.

Are you waiting for home prices to drop before buying? Recently, I spoke with a couple, Bob and Susan, who wanted to sell their current home, but were waiting to buy a new home until home prices dropped or crashed.

They think that as interest rates get higher, prices will surely come down. They want to sell now but wait before buying again. I sat down with Susan and Bob and did the math to figure out their monthly mortgage payment now versus what it would be if they waited for home prices to drop when interest rates go up.

The couple is looking at a common price point of $500,000 for their new home, but they said they would really prefer a lower price. Right now, they would be able to secure an interest rate of 6% or so through one of our lender partners, and they would be using a 5% down payment for the home purchase. The chart at 1:04 in the video shows their monthly payment using those numbers combined with average property taxes and insurance.

“Some experts predict rates will go up to 8%.”

Bob and Susan would be paying under $3,500 per month if they bought a $500,000 home today. Now, Susan and Bob think that home prices will drop approximately 10% over the next 6 to 12 months, and interest rates will increase in that same time. That means a $500,000 home price would drop to $450,000. Sounds great, right? But what happens if interest rates continue to climb?

Some experts predict rates will go up to 8%. As this chart at 1:43 in the video shows, the monthly payment on that same house would jump to $3,748 per month. In this instance, waiting for prices to drop would mean Bob and Susan will have to pay over $285 more per month versus buying now. Once they saw the math on paper, they realized that they would be more comfortable with a lower mortgage payment now, even if they had to pay a higher sales price.

The numbers confirm their thoughts that now is the best time to sell their current home, and take advantage of prices while they're still high. It's a win-win for both sides.

If you're like Susan and Bob and are waiting for prices to drop, contact our team by giving us a call or sending an email for an honest analysis to figure out what you'd actually pay every month. We don't have a crystal ball, and we can't predict the future, but we do have the market knowledge and a number of exit strategies to help you decide if now is the right time to make a move—and remember, It's not the market...it's the marketing that makes the difference!!