Price or Cost? What to Consider When Buying in Highland NC and Cashiers NC

triciacox Cashiers NC , Cashiers NC real estate , Highlands NC , highlands nc real estate , Highlands North Carolina Real Estate , Highlands real estate , Market conditions , Uncategorized Leave a Comment

As Realtors, we hear it all the time, “I’m going to wait to buy because I think that prices may go down some more.”  Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. Could we see prices drop some in 2011?    Of course we could.  Unfortunately none of us have a crystal ball, but in the Highlands NC market, we saw prices remain steady from 2009 through 2010.   One thing we can see in our crystal ball is that waiting is not a good financial decision.   Why you ask.   Because a buyer should not be concerned about housing prices.  They should be concerned about cost.

If a buyer needs a mortgage, the cost of a house is made up of the price AND THE INTEREST RATE they will be paying.  Two different pieces of news released yesterday highlight this point.

The National Association of Realtors released their 4th quarter housing research report.   In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter.  They also showed that prices remained stable during the year.   A buyer who delayed a purchase might find comfort in the fact that prices have not increased.    However, the other news released yesterday should get their attention.

The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%.  Frank Nothaft, vice president and chief economist of Freddie Mac said:  “Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days.  What does that mean to a buyer looking to purchase a home this year?

The price is the same………It just costs more!!!

Date                Loan Amount      Interest Rate     Monthly P&I

2/24/2011      $  340,000               5.05               $ 1,835.60

Nov 2010       $  340,000               4.17               $ 1,656.72

Difference in Mortgage Payment                           $    178.88

By sitting on the sidelines for the last 90 days a purchaser lost:

  • $178.88 a month
  • $2,146.56 a year
  • $64,396.80 over the life of a 30 year mortgage

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.   In other words, get off the sidelines and into the game, otherwise you might lose.

For more information about Highlands and Cashiers North Carolina, and for access to the Highlands/Cashiers NC MLS, contact Meadows Mountain Realty today, 828-526-1717 or email us today at info@bhhsmmr.com. We are your market specialists and show you how to stretch your investment dollar.

About the Author

triciacox