The Cost of Waiting to Buy a Home
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With interest rates higher than they’ve been in a long while, it's unsurprising that prospective home buyers (especially those buying for the first time) are hesitant to enter the market right now. But waiting for interest rates to return to 3% can actually cost you money. Let's take a look at why now is a better time to buy than you might think.
Rates Will Always Fluctuate
Mortgage interest rates fluctuate due to various economic factors, and no one can truly predict their future perfectly. While it's tempting to wait for rates to hit another all-time low, like we saw in 2020 and 2021, there's no guarantee that they will.
By delaying your home purchase in hopes of lower rates, you run the risk of missing out on other significant opportunities, or worse, rates could go up.
Lower Rates = More Buyers
Let's say you decide to wait for interest rates to drop before making your move. The problem is you won't be alone! When rates do go down, a flood of other home buyers will have the same idea and rush to buy a home. This increased demand will likely create an extremely competitive market, mirroring what we saw at the peak of the pandemic. So, be prepared to compete against eager buyers with potentially better offers once rates begin to drop.
You're Losing Out on Equity
Building equity in your home is one of the most compelling reasons to buy now rather than later. Think of equity as filling up a piggy bank - the more you pay off, the more you own. As you make mortgage payments, your equity increases, and you become closer to owning your home outright. Delaying your home purchase means postponing investing in your future!
Rent Your Rate
One of the primary reasons many people hesitate to buy a home is the fluctuating interest rates, especially in today's market. It’s easy to wonder, "What if rates go down in the future, and I miss out on a better deal?" While it's true interest rates can change, it's essential to understand you have the option to refinance your mortgage when rates decrease. Refinancing allows you to take advantage of lower rates and reduce your monthly mortgage payments. Just think of it as renting your interest rate! So, if you buy now and rates drop later, you can still benefit from the lower rates through refinancing.
Home Value Appreciation
The real estate market has historically proven to be a reliable long-term investment. While short-term fluctuations occur, the overall trend in real estate is upward, with home values appreciating. This means that the longer you own your home, the more likely it is to appreciate in value. If you buy now, you can position yourself to benefit from long-term appreciation, meaning you'll make more money in the long run!
Population Growth Remains a Problem Without a Solution
The population is not getting smaller; in fact, it's steadily growing. People will always need places to live, and with limited land available for new construction, existing homes become even more valuable. As the population continues to increase, the demand for housing will grow, which, in turn, will keep pushing up home prices.
According to the National Association of Realtors (NAR), they expect home prices to rise by 2.6% in 2024, and Zillow projects an even more significant increase of 4.9% between August 2023 and August 2024. Waiting could mean paying a premium for the same property a year from now. By purchasing a home sooner than later, you put yourself on the path to financial security and ownership, which will only become more valuable as time goes on.
Don't let the fear of interest rate fluctuations or market timing hold you back from achieving your dream of homeownership. In the end, the cost of waiting to buy a home may be more significant than you think. So, seize the opportunity and make your homeownership dreams a reality today!