Why waiting to buy because of price is a bad idea

If you know someone thinking of buying a home in Tacoma but "waiting for prices to fall some more," be a hero and show her these figures!

"I'd be crazy to buy when prices are falling . . . " she might have said. Her logic is unsound (unless she is a gambler). 

Here's an example. If a buyer were to purchase a $300,000 home today (1) with 20% down:

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If the buyer waited for prices to drop AND IF the buyer gets luck and prices drop 6% (2), BUT in the meantime the interest rates increase to their 10-year average of 6.25%, would our buyer be ahead or not?

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THIS IS WHAT HAPPENS:

• MONTHLY PAYMENTS INCREASE BY $173 / month
• 5-YEAR INCREASED PAYMENT COST: $10,380
• 5-YEAR INCREASED INTEREST COST: $16,507

After only 4.3 years, EVERYTHING gained by waiting (if indeed prices did drop) would be swallowed up in additional interest costs, AND these additional losses will continue through the balance of the 30-year loan.

Willing to gamble that interest rates will remain at this record post-WWII low AND that houses will decrease? The odds don't look very good!

(1) Current interest rates calculated at 4.5% with 20% down payment

(2) 6% price reduction to $282,000 with 20% down = $225,600 mortgage