A Home’s Cost vs. Price Explained
We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home.
Let us explain.
Recently, we reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 4% from now to the end of 2015.
Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.0% by the end of next year.
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:
As you can easily see, the cost of waiting one more year could be as much as $184.84 on a $250,000 mortgage. What if mortgage interest rates rise more than 1% over the next year?
Yes, I know we’ve all been crying about rising mortgage rates for the last few years but, eventually, it is bound to happen. Our economy just posted it’s largest GDP growth in years, job growth has been consistent and inflation is inevitable. The window of opportunity to lock in a 4% rate for 30 years is closing fast.
When you are ready to buy or sell a home in Jacksonville or St. Augustine, call on expert realtors Suzy Evans and Chris Evans.
From the kcm