The Cost of Waiting to Buy a House

When it comes to investments, many people say it’s all about timing. While that’s good advice in theory, there’s simply no way to time the housing market. In a perfect world, interest rates and prices would both be low—and this does happen, but not very frequently.

At current home prices and mortgage rates, the cost of purchasing a home can feel very high. But as home prices rise, the cost of waiting is even higher!?

That is why I am so excited to be able to offer my clients a personal Cost of Waiting analysis for your area. This report can help you understand how appreciation, amortization, and payments are affected by delaying a home purchase.

Appreciation Gain

The average annual appreciation of real estate is between 3% and 5%, but it can vary widely depending on location, property type, and market conditions. As an example, let’s take a look at the cost of waiting to buy a home in Bel Air, Maryland.

With an estimated appreciation gain of 3.8% every year, the cost of a $500,000 house will increase to $539,389 within two years. To put it plain and simple: the cost of waiting for the “right time” to buy is nearly 40K.

Increased Loan Amount

As a result of rising property values, your down payment and loan will also continue to rise the longer you wait.

If you were to purchase a $500,000 home today, with a down payment of $50,000, your loan amount would be $450,000. But, if you were to wait another year to close, that same property would increase in value to $518,997. That would result in needing $51,900 as your down payment, with a total loan amount of $467,097.

While the increase between those numbers might not seem a tremendous amount, the increased loan amount can greatly expand your monthly mortgage.

Of course, there are legit reasons to delay a home purchase—it is a big financial decision. If you need to work on your credit, save for a down payment, or establish an emergency fund, then waiting sounds like a great move. However, if you’re drumming your fingers just waiting for the ideal housing market, then you might want to understand the true cost of waiting.?

If you would like a Cost of Waiting analysis, or would like to start your home-buying journey today, don't hesitate to reach out!

Best,

Ken Venick, CDLP, CMPS

Senior Mortgage Banker | NMLS #138175

410.598.9410

[email protected]