As a seller, you will be most concerned about â€˜short term priceâ€™ â€“ where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the â€˜long term costâ€™ of the home.
Let us explain.
There are many factors that influence the â€˜costâ€™ of a home. Two of the major ones are the homeâ€™s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as â€œThe Cost of Waitingâ€.
What will happen over the next 12 months?
According to CoreLogicâ€™s latest Home Price Index, prices are expected to rise by 5.5% by this time next year.
Additionally, Freddie Macâ€™s most recent Economic Commentary & Projections Tablepredicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time.
What Does This Mean to a Buyer?
Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today: