Should I wait to buy a house in Boston?

by Cassandra Cumberlander

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One of the things that has remained pretty constant in this market is the confusion buyers feel about whether they should by a house in Boston now or whether they should wait. With rising interest rates, many people think that they should wait because the market is still too uncertain, and prices will have to drop to prevent another housing bubble. Hate to break the news, but this may not be true.

Let’s take a look at 4 times in recent memory: 1983, 1987, 1993, and 1999. If you just look at these years, you’ll see that every time there has been a spike in mortgage interest rates, home prices have INCREASED, not decreased, as this graphic shows.

Leading industry experts now project that, by this time next year, interest rates will be between 4.75 and 5.25%.  How will those rates impact the amount of house you can afford? Take a look at this:

So, take that single family home you’ve been eyeing in the Neponset area of Dorchester that’s listed for $400,000. At a 4.5% interest rate today, you’re looking at a payment of around $2,027 monthly. If the interest rate projections hold true, that same home could cost you $182 more at a 5.25% rate. That’s $2184 more each year that you won’t have in your savings or investment account.

Delaying your home purchase can have a real financial cost associated with it; we all know that the best predictor of what will occur in the future is what happened in the past.  Be sure to consult with knowledgeable real estate professionals and lenders to help you make the best decision possible in your situation.