If you’ve been keeping up with the real estate market, you’ll see that throughout 2013 there was plenty of emphasis on the ‘price’ of a home verses the ‘cost’ of a home. Home and property buyers should not only be aware of the rising home values, but should also acknowledge what was about to happen to mortgage interest rates.
Comparatively, we can establish exactly what it costs a buyer who waited to buy a home instead of buying a home at the end of 2012.
Waiting to purchase resulted in an increase in the monthly mortgage payment of over $200! Figuratively, that’s about 10 trips to the movies a month, two weeks worth of groceries, or one and a half 1 day park hopper tickets to Disneyland.
Now, let’s see how that adds up over the life of a 30 year mortgage.
Can you imagine how many groceries you could have bought this year with $2,495? Now, we can’t change the past, however what occurred in the last twelve months should shed some light on what’s to come if you’re considering making a housing purchase this year. Here is what it may cost a buyer at the end of 2014.
Another $200 more a month than if they were to purchase now. We’re here to help you make an informed decision when it comes to the timing of purchasing a home.
Many philosophers and scholars believe there will be a dramatic drop in real estate values because mortgage rates are starting to rise. The logic makes sense, however history shows that rising rates have not negatively impacted home values in the past.
Several times over the past 30 years mortgage rates have significantly increased. Here is the impact the increases had on home values at the time:
Dates |
Mortgage Rate |
Home Values |
| May ‘83 – July ‘84 |
12.63 – 14.67 |
+ 6.6% |
| March – Oct ‘87 |
9.04 – 11.26 |
+ 5.2% |
| Oct ’93 – Dec ‘94 |
6.83 – 9.2 |
+ 1.2% |
| April ’99 -May 2000 |
6.92 – 8.52 |
+ 10.9% |
Perhaps the impact of increasing rates on future home prices won’t be as impacting as some are predicting.
