The housing market, as it sits right now, is experiencing some of the most unique conditions ever seen. After the blockbuster sales figures of the last couple of years, the market has cooled significantly due to the highest interest rates seen since the turn of the millennium. In addition, the lack of available inventory in the United States means that, while sales are down and rates are up, house prices are still high. With all of these conditions, many people across the US are choosing to delay.

Here’s the interesting thing though: right now is still a great time to buy a home! In fact, right now is the best time to buy a home! You will never have a better time to buy a home, even with the record-breaking interest rates of today. To show you why, I’ve come up with an example.

Let’s say that this home is currently on the market for $1,000,000. Nice, right? It’s perfect because it’s right in your (hypothetical) price range. You think about putting in an offer on the house, but choose not to at the last minute because interest rates are high, and you’d rather wait for the rates to come back down before buying.

You’ve now waited a year for the rates to come down, and the rates did fall one whole percentage point. That’s great! A one percent drop, at a loan amount of $1,000,000, would be about a $500/month savings! That’s great as well! You’re now back on the market, and you’re looking to purchase the exact same house. Luckily for you, it just got relisted on the market at a very competitive price of $1,030,000.

Surprised? What’s with the $30,000 increase?

The effects of waiting to purchase a home are threefold. While you were waiting for interest rates to come down, three major consequences happened:

Property Appreciation

That’s where the $30,000 comes from. Home values have steadily appreciated 5% year-over-year since the 1970’s, and that trend is not stopping any time soon, especially with the lack of available inventory.

Loan Amortization

Since you waited a year to purchase the home, you now have an extra year of mortgage payments to account for. If you had purchased a year earlier, you would have already paid down the mortgage by $8,900, but instead you’re starting at baseline a year later.

Rent Expenses

If you wait a year to purchase a home, you’ll likely need to pay rent elsewhere while you wait. Renting can be a good decision, depending on your situation, but remember: at the end of the day, rent is a cost that has no long-term financial benefits. You live at the mercy of your landlord who can raise rent, choose your neighbors, or evict you. And when you’re done renting and ready to move out, you leave empty-handed; your rent payments paid the landlord’s mortgage, and the landlord gets to keep the appreciation.

By the time that you’re ready to buy a home a year later, you’ve been effected by those three consequences. What does that mean for your wallet? Well, you’ve lost out on a total of $33,879. You lost out on $30,000 of property appreciation, and you lost our on the opportunity of paying down your mortgage $8,900 over the first year. You only saved $4,560 in mortgage interest, meaning that you lost out on a total of $33,879.

So What Should You Do?

The power to make a smart financial decision lies in your hands. By understanding the real costs of delaying a home purchase, you’re already one step ahead. Why not take the next leap? Reach out, and together, we’ll turn this knowledge into action. Secure your financial future with a mortgage tailored just for you.