Waiting for higher interest rates to depress prices may not be your best home-buying strategy.

That's because interest rates have become part of a vicious housing market cycle that's pushing prices up, not down, and more than ever conditions warrant a more holistic approach to buying a home.

This year, interest rates have been rising during the season when most buyers traditionally hit the market. That has swelled the ranks of seasonal buyers with an influx of buyers chasing interest rates.

The extra demand is contributing to higher prices.

As prices rise, yet another wave of buyers begin to chase rising prices.

If interest rates are your buying indicator, it's a cycle that may not end anytime soon.

During the mid- to late-1990s' technology-driven economic and housing boom, interest rates were, at times, more than two percentage points higher than they are now. In the 1980s' housing boom, mortgage interest rates were higher still, from 10 percent to more than 12 percent at times, according to Freddie Mac.

In addition to higher interest rates-driven demand and related higher home price-driven demand, demographics and mathematics continue to put further price pressures on the housing market.

The growing bulge of second home-buying baby boomers and homeowners who see housing as their only money-making investment, those groups have done the math. Stocks remain well below their peaks, while housing not only survived the recession, but helped shoulder the national economy through the downturn. Older, wiser buyers are moving up and moving on to second and third houses.

What's more, for most buyers, the bottom line isn't home prices or even interest rates, but the affordability of the monthly mortgage. As long as buyers continue to enjoy income growth and can make that mortgage payment, they will continue to buy into a market. A host of mortgage programs make housing more affordable.

And then, of course, there's the housing shortage. From Delaware to California the shortage of housing also exacerbates home prices.

Bottom line?

Interest rates don't rise in a vacuum and that makes an interest rate-driven home buying strategy a myopic approach to the transaction.

Even when all the market conditions appear to trumpet "Buy!," it's not your time until owning is cheaper than renting and a home purchase is a natural fit for your financial needs, goals, obligations and lifestyle.

Instead of making the home-buying decision based on one or more economic conditions alone, don't overlook the more holistic context of your own home economics.

If you are too over-burdened financially to buy a home and take the "Buy now!" advice, it could bankrupt you.

Step back, take a thorough look at your financial picture, pay off debt and otherwise take the time to prepare yourself for the financial responsibilities of home ownership. Don't overlook the value of a financial planner or other professional personal finance specialist for objective advice about home buying.

The most expensive transaction you'll likely ever complete, comes with many more costs than the monthly mortgage payment, property taxes and insurance.

For you, it's the "right time to buy" when buying a home won't put you in the red.

Published: July 7, 2004

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.