I was reading an article this morning titled: Average House Payment Has Risen 21% In Past Year - compared to the fourth quarter of 2012. That is pretty substantial! It got me thinking about the Cost of Waiting here in Oregon.
Based on CoreLogics Home Price Index Reports, here is an example of what a $300,000 home at the beginning of 2013 is worth at the end of 2013. These reports can be found on CoreLogics website.
Oregon ranked 4th out of all states with the largest year-over-year home price appreciation in December at 13.7%. While home appreciation isn't expected to be that high this year, experts believe that home appreciation will be very favorable in the next few years. Here are the results from the Home Price Expectation Survey which polls over one hundred economists, real estate professionals, and investment and market strategists.
That comes out to nearly $100K more in value through 5 years using the lowest average predictions! But the Cost of Waiting isn't purely based on home values. We must also factor in rising interest rates. Here is a simplistic example assuming 4% appreciation year-over-year:
Interest rates are projected to be over 5% by the first quarter of 2015. We are not sure where they will be by the end of 2015 so we used 6% for this example. Because we are in a market with high home affordability (comparatively low interest rates and low home values), each year homebuyers wait will have a BIG impact on their payment and the size of home they can afford.