Alex it is a tough dilema. The elasticity of sellers is something we have always talked about before. Sticky, SUPER sticky on the way down. Even though the rates have jumped and in the long run they will move higher, the rate at which sellers start to price lower in order to offset the rate increase is hard to predict. Many posters here want and hope for it to happen fast but the reality is that it may not. The next year or two may be particularly frustrating for wannabe buyers like you and I because the rate increase will not force the price decrease that we want. Eventually it will, maybe 08, 09, 10… who knows. All the usual factors we all talk about like inventory, foreclosures and stuff like that will have bearing.
For the next few months though, don’t expect the near term pricing to catch up to the recent rate spike we have encountered.
All things being equal, if you have downpayment money, then yeah buying a lower priced home at a higher rate makes more sense then buying a higher priced home at a lower rate. Again the caviot to that is that the home needs to be priced low enough to offset the rate hike so that the payment is roughly equal. The win for you is large, more equity instantly, a lower property tax payment, and the chance to refi when the rates go down along with a higher probability that the home will appreciate rather then depreciate.
