If you’re thinking of buying a home, but don’t feel quite ready, think again! What is the Real cost of waiting to buy?
Not everyone is buying real estate or should buy. But for many of you that know you want to buy at some point and are wondering if you should jump in now or if you should wait, this is for you! Welcome to Keeping It Real Estate
I’ve been hearing buyers say something like “I know I want to buy, I’m ready to buy now but should I wait 6 months, or 1 year or do it now?” or they ask me “Prices have gone up so much is it too late to get in before the market falls?”
Well, let’s talk first about the opportunity cost of waiting and then I will address the state of the market and what the next few years is expected to look like.
You may think waiting a few months won’t make a big difference financially, but the real estate market has shown it can- and it will! Simply said, if home values are higher or if mortgage rates are higher, either of these will effectively result in a higher mortgage payment for the same loan amount. While there is no crystal ball, it’s safe to say that property values are on the rise and interest rates cannot remain this low forever.
The opportunity cost of waiting to buy is essentially the additional funds that will be required to buy a home if prices or interest rates increase, and the equity that could have been realized if values increase. When property values increase so does the down payment requirement, and your monthly mortgage payment will increase, and it will include more interest. Additionally, you can lose potential gains specifically any gains in equity you could have achieved in the value of the property going up. You could have missed equity and you don’t want that right?
Let’s put this into perspective quickly- if you’re paying $4000 month in rent that money is considered a loss. If you’re paying $4000 a month towards mortgage, part of that money is going towards the principal of the loan and thus you’re building that important home equity and then when you’re spending $4000 a month on a mortgage, if the home goes up in value you have gained equity or money just like if you were holding a stock that went up in value.
Bottom line: you may think you’re saving money by delaying the purchase of your next home, but you could be losing more money on the missed equity, the higher down payment requirements, paying a higher interest rate and on the higher mortgage payments for the same loan amount.
Now let’s quickly address the state of the market- here’s the deal. Interest rates cannot remain this low forever and they are the lowest they have been for the 30-year fixed mortgage- it’s almost free money.
The sentiment of home ownership took a 180 turn from not being important to being most important for most Americans out there. Due to the low interest rate, many renters are now stepping up to homeownership as the dwindling disparity between mortgage payments and rental payments.
Cryptocurrency as an investment option for many investors once turned to has become extremely volatile and unstable and has sent investors back the good old fashioned real estate. Also, predictions state the stock market is falling in coming years which means that real estate investments should increase as they are inversely related. And you sum that together, more likely than not you have a stable market in coming years.
So, are you ready, let’s make it happen for you? Call me today and get going on your house hunt or investments and be ahead of the game!
