History Repeats Itself

We have been spoiled with these low interest rates throughout the past decade. Ten years may seem like a long while, but in the scheme of things it is just a blip in time. It is, however, long enough for many people to forget the alternative—rates double or more what they are now.


For those of you just “waiting it out”…what are you waiting for? Rates below 3%? Unfortunately many prospective homebuyers I’ve come across don’t do the math as to how a higher rate will directly affect them. It may be the difference between buying a townhome instead of single family, or expanding that “ideal location” criterion. A 1% increase in the interest rate, such as from 4% to 5%, is the equivalent of a 10% increase in the purchase price on a monthly payment basis.

And many won’t realize it until it’s too late. Now truly is an incredible time to buy. I’m not saying it’s going to be the 1980s again anytime soon with rates in the mid-teens…though my daughter does have a pair of leg warmers…but we need to realize the 4% mortgage rates are the pleasant exception, not the norm. Having rates climb a few points and thus have a drastic effect on home affordability is quite possible in the near future.

Once rates do start to climb again (and they will), are we going to see people “wait until they go back down”? I’m sure we’ve all heard and possibly forgotten the famous quote, “Those who cannot remember the past are condemned to repeat it.”

What are you waiting for?