There are so many factors that come into it. What is your financial position going to be in an extra year vs. how much will it cost you to buy?  You may be chasing a moving target.

The biggest unknown is the cost of borrowing money. Historically interest rates can swing like drunken monkeys A one percent rise in interest rate on a $250,000 loan increases your monthly payment by about $150 per month, depending on where you start.  The change is $146 going from 4% to 5%, and $156 from 5% to 6%.  (Link to For Buyers/Loan Analysis) The 2013 average closed sales price in the Triangle MLS system was $246,700 for all homes and $231,000 for resale homes only, so $250K is a good gauge for many people.

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Our interest rates have been artificially bought down by the government since the financial meltdown. That has been going on for several years now, and the national deficit is showing it. Basically, 5% is where mortgage rates make no money, according to my banking sources. Banks don’t do things to make zero money. They will charge as much as they can, and it is influenced largely by how much the money sources can make elsewhere, like Bonds.

When is the dam going to break? I wish I knew. No one thought it would be this low for this long. Bernanke has made noises about putting things back to normal, but market and political pressures have held him up a couple of times. We do know it is going to happen, we just don’t know exactly when. Remember too, that is money paid to buy the exact same house, not buy more house.

I know that sounds alarmist from your vantage. From my vantage, I’ve seen rates change that much in a month. Rates have been quite stable for the last few years under government control, but before that we were used to a 1% swing as the normal fluctuation … sometimes during the buying process. It was extremely important to lock the rate once you had a contract, because those six weeks could break your sale. (And often did if not locked.)

Also, prices are an issue, but it won’t put you nearly as far behind. If your house increases at relatively the same rate as the one you buy (an assumption), you will be behind.  Round numbers - If a $200,000 house increases by 10%, it becomes $220,000. If a $350,000 house increases by 10%, it becomes $385,000. It has increased $15,000 more than the smaller house, but most of that would be financed over 30 years. While unpleasant, it wouldn’t keep you from being able to move.

What is the goal of waiting? If it is to save enough for a 20% down payment, it probably isn’t worth the risk. Even if you have to pay PMI, (private mortgage insurance) you can remove it later by proving you have acquired enough equity. This could include paying the principal down with your budgetary savings. In effect, you can put your monthly savings into your mortgage at a 4%-5% rate vs the bank at a small fraction of a percent. Since it’s amortized interest vs. simple interest, the effect is even bigger than it appears. You’ve actually shaved years off the term of your loan, and therefore big bucks, while you’ve increased the equity. And, the equity increases on its own in a rising market. (Disclaimer-I can’t guarantee the market will rise any more than interest rates. I’m using the data available.)

Triangle Home Sales up 11.2 Percent in January

The same factors that catalyzed widespread market recovery in 2012 and 2013 are likely to continue in 2014, though perhaps at a more moderate pace. That's not a bad thing, since the market is returning to a stable, healthy state. Potential trends to watch for in 2014 include increased seller activity, more new construction and fewer foreclosures on the market. Inventory is another metric to watch this year.

Prices marched higher. The Median Sales Price increased 10.8 percent to $198,000. Days on Market was down 9.6 percent to 103 days. Absorption rates improved as Months Supply of Inventory was down 24.1 percent to 4.7 months.

Given how far the market has come, it's a good time for folks to reassess their situation. Many who were hesitant to sell in recent years may find themselves in a completely different position. Getting a fresh comparative market analysis might be a good idea. Interest rates remain attractive and should remain below their long-term average, but they are expected to creep higher in 2014. Politicians are gearing up for midterm elections, so pay close attention to campaign messaging as relates to real estate or mortgage financing. Job growth is still fundamental and is likely to dominate this election cycle. -Stacy Anfindsen, Birch Appraisals, for the Triangle MLS.

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Waiting another year is a gamble. You’re betting that interest rates don’t rise enough to make it painful or impossible next year to move, although we know they must go up. You are also chasing prices, which are clearly rising. In many cases, you are better off owning  the increase of a larger priced home  than a smaller one - as long as you are staying in the normal range for your area. Unusual  or very expensive properties are a calculation on a different scale.

My analysis- the risk of waiting a year is very high versus the possible gains. You would definitely lose on some points and likely lose on the important points. You would gain on relatively minor points.

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