Why Wait? The Hazards of Timing the Market

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Buyers Who Choose to Wait “until prices come down more” are choosing to gamble.

Single red percent symbol among many dollars

The issue we’re seeing with waiting to purchase when prices go down… are that they’re also risking the potential interest rates  will slowly creeping be up.  

If you wait for prices to go down, you’re at risk to be getting a higher interest rate.  

Here’s a good flow chart:

Buy Now:
Home Price:  $200,000
Interest Rate:  6%
Payment:  $1,199/month

Scenario #1:
Home Price: $190,000
Interest Rate:  6.5%
Payment: $1,201/month

Scenario #2:
Home Price:  $180,000
Interest Rate: 7.0%
Payment:  $1,198/month

If you decide to wait for prices to drop, and the interest rates end up increasing….  You’ll have to wait for prices to drop by 10% in order to offset the 1% increase in interest rates.  If you’re buying cash then the world is your oyster… if financing then perhaps you should take advantage of the current inventory and current interest rates.  Hope this helps!!

Rate Updates from FreddieMac:  http://www.freddiemac.com/pmms/

 
    2018  
      PRIMARY MORTGAGE MARKET SURVEY®  
      Summary page with all rate types – U.S. averages  
                   
  U.S. 30 yr U.S. 15 yr U.S. 5/1 ARM U.S. 30 yr FRM/  
  30 yr fees & 15 yr fees & 5/1 fees & 5/1 ARM 5/1 ARM  
Week FRM points FRM points ARM points margin spread  
1/4 3.95 0.5 3.38 0.5 3.45 0.4 2.75 0.50  
1/11 3.99 0.5 3.44 0.5 3.46 0.4 2.75 0.53  
1/18 4.04 0.6 3.49 0.5 3.46 0.3 2.74 0.58  
1/25 4.15 0.5 3.62 0.5 3.52 0.4 2.75 0.63  
2/1 4.22 0.5 3.68 0.5 3.53 0.4 2.75 0.69  
2/8 4.32 0.6 3.77 0.5 3.57 0.4 2.75 0.75  
2/15 4.38 0.6 3.84 0.5 3.63 0.4 2.75 0.75  
2/22 4.40 0.5 3.85 0.5 3.65 0.4 2.75 0.75  
3/1 4.43 0.5 3.90 0.5 3.62 0.4 2.75 0.81  
3/8 4.46 0.5 3.94 0.5 3.63 0.4 2.75 0.83  
3/15 4.44 0.5 3.90 0.5 3.67 0.4 2.75 0.77  
3/22 4.45 0.5 3.91 0.5 3.68 0.4 2.75 0.77  
3/29 4.44 0.5 3.90 0.5 3.66 0.4 2.76 0.78  
4/5 4.40 0.5 3.87 0.4 3.62 0.4 2.76 0.78  
4/12 4.42 0.4 3.87 0.4 3.61 0.3 2.75 0.81  
4/19 4.47 0.5 3.94 0.4 3.67 0.3 2.76 0.80  
4/26 4.58 0.5 4.02 0.4 3.74 0.3 2.76 0.84  
5/3 4.55 0.5 4.03 0.4 3.69 0.3 2.76 0.86  
5/10 4.55 0.5 4.01 0.4 3.77 0.3 2.76 0.78  
5/17 4.61 0.4 4.08 0.4 3.82 0.3 2.77 0.79  
5/24 4.66 0.4 4.15 0.4 3.87 0.3 2.77 0.79  
5/31 4.56 0.4 4.06 0.4 3.80 0.3 2.77 0.76  
6/7 4.54 0.5 4.01 0.4 3.74 0.4 2.77 0.80  
6/14 4.62 0.4 4.07 0.4 3.83 0.3 2.77 0.79  
6/21 4.57 0.5 4.04 0.4 3.83 0.3 2.77 0.74  
6/28 4.55 0.5 4.04 0.5 3.87 0.3 2.77 0.68  
7/5 4.52 0.5 3.99 0.4 3.74 0.3 2.77 0.78  
7/12 4.53 0.4 4.02 0.4 3.86 0.3 2.76 0.67  
7/19 4.52 0.4 4.00 0.4 3.87 0.3 2.76 0.65  
7/26 4.54 0.5 4.02 0.4 3.87 0.4 2.76 0.67  
8/2 4.60 0.4 4.08 0.4 3.93 0.2 2.76 0.67  
8/9 4.59 0.5 4.05 0.5 3.90 0.3 2.77 0.69  
8/16 4.53 0.5 4.01 0.5 3.87 0.4 2.75 0.66  
8/23 4.51 0.5 3.98 0.5 3.82 0.3 2.75 0.69  
8/30 4.52 0.5 3.97 0.5 3.85 0.3 2.77 0.67  
9/6 4.54 0.5 3.99 0.4 3.93 0.3 2.77 0.61  
9/13 4.60 0.5 4.06 0.5 3.93 0.3 2.77 0.67  
9/20 4.65 0.5 4.11 0.5 3.92 0.4 2.76 0.73  
9/27 4.72 0.5 4.16 0.5 3.97 0.3 2.76 0.75  
10/4 4.71 0.4 4.15 0.4 4.01 0.3 2.76 0.70  
10/11 4.90 0.5 4.29 0.5 4.07 0.3 2.77 0.83  
10/18 4.85 0.5 4.26 0.4 4.10 0.3 2.77 0.75  
                   

 

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