I am contracted for a new build that is scheduled to complete in late July. It's in Westminster, CO. I'm not worried about job security and believe I make enough to afford the house reasonably. It's 1900 sq ft, 3 bed 3 bath for ~$530,000.
I'm wondering if it's better for me to walk away and look at buying other houses in the area (assuming a price drop is coming in the next 24 months). I would lose:
- $5k earnest deposit
- $2k lock fee for locking in loan at 3.85%
- $6k options fee with builder (they haven't collected this yet so I may be able to walk away without paying this?)
vs. losing out on what the house could drop to in this climate. (worst case scenario, houses drop 30% - 40% and I'd lose out on buying one of these cheap houses instead of the one I locked in to build last January. I currently rent a 1300 sq ft apartment about a mile away from the new house for ~ $2200 / mo.
I would be willing to take a loss of say...10 - 15%. More then that would really make me wish I waited another 6 - 12 months.
The other element in this is the interest rate. I have the ability to float it down once in June, so my guess is that 3.85% would become a decent amount lower. I plan to be in this house for 10 years.
Do I stay on target, close on the house and potentially miss out on $100k of cheap house value?
OR
Do I walk away, take the $7k - $13k hit and buy a house in 6 - 24 months instead?