Will prices fall enough? All you need to know

• Enough to compensate for the higher interest rates?
• Enough to make you want to buy today?
• How much do they need to drop to be the right number

Here’s the truth of it. House prices may (will likely) go down some, but when they do, the higher interest rates will offset it. Just one percent in a mortgage rate on an average home of $350,000 will make about $230 a month difference in your payment.

The price has to drop $35,000 or more to make up for the difference in rate. This is equivalent to about 10% price reduction. Here is an easy thing to remember when it comes to rates and prices moving around…

1% in interest rate equals 10% in house price.

There has been a lot of people that try to time the market to get the most of low interest rates and prices. But the recent market of very low interest rates and “lower” priced homes is gone. That era has passed, and we won’t see it again for years. By the time they came back to low rates and prices, you will wish you bought a home, because enough years and appreciation will mean you made money in the market.

You could potentially catch it just right. But instead, what if you consider this option? Buy the house you like when you can afford it. If the rate is “too high”, refinance when rates come down.

PREDICTION

Homes will always go up in value over a 10-year period. Even with the worst recessions in the middle of that time. But rates will fluctuate. There will be high rates and low rates. Rather than gambling on the future low rates and low prices option, just lock in a house you like and can afford. Time will make the home worth more eventually. And rates will dip after a few years, offering you an opportunity to refinance. Then you can create a win-win scenario.

If rates drop lower, prices will go higher. When prices drop, rates will go higher.

The way you win in real estate is to buy when you can and hold the property. You will never look back 10 years and regret what you paid for a home. This is proven in history for as far back as you can track it.