Is it better to buy now while interest rates are low, or is it better to wait for prices to come down?

Scenario #1: Higher Purchase Price, Lower Interest Rate$1,000,000 Purchase (20% Down Payment)           

1st TD $800,000@6.0%           $4,797.96           

Taxes                                       $1,041.67           

Total                                       $5,839.63

After Tax                                $4,125.46 Assuming 33% tax bracket

Principal                                  $9,575.52        1^st Year

Interest                                    $48,000           1^st Year

Scenario #2: 10% Price Reduction, 1.5% hike in Interest Rate$900,000 Purchase (20% Down Payment)

1^st TD $720,000@7.5%            $5,035.51

Taxes                                       $937.50

Total                                       $5,973.01

After Tax $4,124.26 Assuming 33% tax bracket

Principal                                  $6,426.12        1^st Year Interest                                    $54,000           1^st Year

As you can see from the above scenarios, the difference in monthly payment would only be $1.20 more per month (after tax). However, after the first year, you would have $3,150.00 more in equity if you bought today. As the years go on, the amount you pay towards your principal would increase, and the amount you pay towards interest would decrease, making it even more advantageous to buy in today’s market. Please give me a call if you would like further detail or a more specific scenario.

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