Should you buy a home now?

With interest rates at 6%, and the specter of gradual increases in the federal prime lending rate, many prospective home buyers question the affordability of buying a home at this time.
Historically, interest rate adjustments are made in small increments (say @ ¼ of 1%) and trend in one direction over a long period of time. The last time interest rates were at 6% was in May 2004. So it took 18 months of trending down and then back up to return to the 6%.
A buyer finds a house for the right price but the new higher interest rate will mean a greater monthly mortgage payment and walks away without bidding. A seller, being informed by his agent, is made aware of a probable sale agreement and the concerns at hand. One option is for the seller to adjust down on the asking price thus offsetting the higher interest rate. The end result is that the buyer gets the desired home at the same monthly payment and the seller has sacrificed a very small percentage of the asking price

Home prices have been moving up and down like stock prices. But, unlike stock prices, the equity in your home is not liquid. If the real estate market is in despair when you need to sell, you may have difficulty selling. To protect yourself against unpredictable changes in the real estate market, don't buy unless you plan to keep the property for five to ten years.

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