Buying a Home: The Cost of Waiting

by The KCM Crew on July 1, 2014

Whether you are a first time buyer or a move-up buyer, you should look at the projections housing experts are making in two major areas home prices and mortgage rates.San Francisco Realtor


Over 100 economists, real estate experts, San Francisco Realtors and investment & market strategists were recently surveyed . They were asked to project where home prices were headed. The average value appreciation projected over the next twelve month period was approximately 4%.


In their last Economic & Housing Market Outlook, Freddie Mac predicted that 30 year fixed mortgage rates would be 4.8% by this time next year. As of last week, the Freddie Mac rate was 4.14%.


If you are a first time buyer currently looking at a home priced at $250,000, this is what it could cost you on a monthly basis if you wait to buy next year

If you are a move up buyer currently looking at an Ingleside Terrace Home and Home priced at $500,000, this is what it could cost you on a monthly basis if you wait to buy next year.


New reports are revealing that the number of months inventory of existing homes available for sale is increasing. Some of these sellers are moving up, some are downsizing and others are making a lateral move.

There is no way for us to predict the future but we can look at what happened over the last year. Lets look at buyers that considered moving up last year but decided to wait instead.

Assume, last year, they had an Ingleside Terrace Home worth $300,000 and were looking at a home for $450,000 (putting 10% down they would get a mortgage of $405,000). By waiting, their house appreciated by approximately 10% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $330,000. But, the $450,000 home would now be worth $495,000 (requiring a mortgage of $420,000 assuming the original $45,000 down plus the additional $30,000 from the sale of their home).

Here is a table showing what the difference in monthly cost (principal and interest) would be if a purchaser had waited.Ingleside Terrace Homes

3 dollars and 27 cents. Was it worth waiting a year to move up to the home of your dreams? Only you can answer that question.

Moving Up?

If your family plans on moving up in the next twelve months, it may make sense to move now rather than later. Prices are definitely still appreciating and, unlike the last year, interest rates are also projected to increase.

Agents Do you have the visuals you need to be able to properly explain the cost of waiting to your clients? Start your 14-day free trial of the KCM Membership today to access the most recent Market Reports.

Bottom Line

With both home prices and interest rates projected to increase, buying now instead of later might make sense.