The waiting game could prove costly in local housing
Mar 31, 2015, 9:31 AM | Updated: Oct 10, 2024, 1:59 pm
While some borrowers are waiting for more homes to become available in the Puget Sound region, they may be facing a double-edged sword on the financial front – the loss of appreciation and rising interest rates.
“Buyers face the risk of inventory continuing to appreciate which affects affordability,” said Anthony Grasst of HomeStreet Bank. “More importantly, they face interest rates changing and rising. That is the biggest thing. Interest rates’ upward movement erodes affordability more than anything else.”
According to Grasst’s example, if current interest rates rise from 4.5 percent to 5.5 percent on a $300,000 30-year-fixed mortgage, a borrower would see their monthly payment increase by 12 percent. That’s an additional $183 per month, or $66,000 in interest over the life of the loan.
The inventory of resale and pre-build homes is not expected to recover until summer or fall. But, this doesn’t mean prospective buyers who want to secure a low interest rate are relegated to massive bidding wars, according to Peter Wheeler of Pacific Ridge Homes.
“With a presale home, you can even choose the model you want and then the homesite,” Wheeler said.
