Where are the rates going and how does that translate to a buyer's purchasing power?

Those of us who have never purchased a home or buy (at most) a few homes during our life time, don't really know  or care so much about interest rates. On this blog, my goals are to show you where experts believe interest rates  are heading during next 12 months and how that can affect you, the buyer. You may then draw your conclusions at the end (or use mine) 
At the moment rates are at about  3.5% (that's considered super low) , experts at Freddie Mac, believe that they are going to be rising. (Slide 1) "But how does that affect my buying a house?" you asked. 
Lets imagine with the income you have, you can only afford  a payment of $1852/month for your mortgage. Even though you make $5,000/month, you still have to eat, make your car payment,  pay off your credit card, pay off your student loan,  and take care of your family. 
So, based on that number, $1,852, you can either buy a $400,000 home when interest rates are %3.75 or one at $390,000 when interest rates are at %4 or one at $380,000 when interest rates are at %4.25, etc. 
So, as you see, your buying power decreases as interest rates go up.
Conclusion#1: It's better to buy today when interest rates are lower than tomorrow when interest rates are higher. But wait there is more:
Lets add the factor of home price increase to our scenario: In case you didnt know, home prices are on a rise: In Sacramento area, average price of a SOLD home increased %9.6 during last 12 months. That means you get less of a home today for the same money than you did a year ago. And you will get less of a home a year from now than you will today. 
Conclusion #2:  Go back to conclusion#1: Buying today is better than waiting and buying tomorrow (if you can) 
I hope this was helpful. 
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