Originally posted by: Cuda1447
Well I'm not as concerned about timing the bottom perfectly. The bottom will come, then prices will start to rise again (hopefully a bit slower than last time). I want to get in a house and I want to get in without to much hassle and at a good interest rate at a price I can afford. I also don't want to get ripped off. If I can achieve that, its worth it for me.
I'd rather buy a house now that costs $135,000 at 5.5% then get the same house for $125,000 (7.5% decline) at 6% a year later, in a market with more competition (buyers) and more hassle. See what I'm saying?
First off, mortgage rates aren't going up too much in the near future. With the Fed making direct purchases of Agency MBS, you're going to see conforming loans go down to about 4%. Additionally, that 10K in decline will cost you 550/yr at 5.5%.
Over 30 years the difference between the two prices and interest rates stated is 93,963 vs 112,594 after assuming a 28% tax rate. However, this difference is mostly made up by the 10K price difference, the remainder would be made up by the difference in property taxes and insurance for carrying an extra 10k house.
You see, this isn't as cut and dry. You won't time the bottom and it still might appreciate before you can hit it. However, it *will* go down more in the next 6-12 months in all likelihood, and since prices are declining more than 1% per month, in Tampa's case, 2% per month, that's a pretty costly proposition to buy now, vs 1 year from now.
In my case, I am waiting. While prices in CT haven't declined as much as other areas, they have declined. When you're talking about buying a 600k house (which is the lower bound of a decent place here), even a 2% decline can be huge.
I don't think we'll see rates bottom out for another few months and they won't increase significantly for many months after that.
