Buy at Lower Prices or Lower Rates?

The Better Home Value... Low prices or Low rates?

By: Elizabeth Portermortgage-rate-chart

If you are preparing to buy a home, you might be trying to perfectly time the market and wait for prices to inch just a little lower.  We all want a good deal.  Agreed.  But could waiting for home prices to fall actually cost you more?  Yes, it is possible and if you wait much longer, it’s highly likely.

Most prospective buyers watch what home prices are doing but don’t keep an eye on mortgage interest rates.  In the blink of an eye, you could pay anywhere from $30,000 to $100,000 or more in higher monthly payments if mortgage rates sneak up just one or two percent.

I live in Florida and the real estate market here is very different today than this time last year.  The inventory of homes available is dramatically lower, prices are showing steady months of increases and the “days on market” as reported in the multiple listing service (MLS) has reduced.

This change over the last 12-months is good news for both buyers and sellers.  Sellers of course are able to inch towards making a profit.  Homes are in demand and in many cases multiple offers are coming in on the same property within the first few days of listing.  The improved market is also good for buyers.  Chances are you know someone that wants to buy but doesn’t want to buy at the “bottom” for fear prices could continue to slide.

What is most likely to happen?  In August, 80 housing markets were listed as “improving” according to the National Association of Home Builders/First American Improving Markets Index (IMI).  In September, that number rose to 99.  In October, more than 100 markets reported improving conditions.  Improving market conditions mean there is increased demand.  Increased demand leads to higher prices.

While all of this is happening, is anyone keeping an eye on interest rates?  We all know they have been at record lows.  As the housing market continues to rebound, the economy will also become stronger and a stronger economy will bring higher interest rates along with it.

So how could rising interest rates change your monthly payment? These illustrations will give you an idea of how even the slightest bump could cost you thousands.


If by chance you are able to find a seller in distress with the need for a quick-sale, let’s say they drop their price by 5%, but you are so focused on price you didn’t realize that rates went from 4% to 5%, just a one percent increase.  You just added almost $30,000 to your bottom line, while you were waiting on a 5%, or $12,500 price reduction.


Don’t miss out.  Waiting for home prices to fall can cost you tens of thousands.  Buy the home you want while interest rates are at their lowest.  The economy is on the rise, prices are on the rise.  It’s only a matter of time before interest rates are on the rise.  Higher interest rates diminish your purchasing power.  Don’t let it happen to you.

Do you have a mortgage question? We are here to help.  Send us your question and we are happy to get you answers.

We invite you to check out our finance section of to learn more.

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