3 Reasons Waiting to Buy Could Cost You Thousands

You’ve probably heard it many times, the real estate market is crazy right now. It’s been an extreme seller’s market for a while, but we are starting to see the market shift. There’s more inventory and not as much competition. So it’s a great time to think about buying. However, a lot of people are saying, “I’ll just wait until the market cools down to buy.” That decision could cost you thousands of dollars. Here’s 3 reasons why:

Mortgage Rates are Still at Historic Lows & Could Rise Sooner than You Think

Let’s look at how the 30 year fixed mortgage rate could change over the next year. Throughout this year, we’ve seen mortgage rates at historic lows, ranging from about 2.8% to 3.16%. But many financial experts are predicting that mortgage rates will rise the economy recovers from the pandemic. Three major entities forecasted these rates for the end of 2022.

Freddie Mac: 3.8%
Fannie Mae: 3.2%
Mortgage Bankers Association: 4.2%

The average of those three is 3.7%, which is nearly a full percentage point higher than what we’ve seen in 2021. That means you could save a lot of money if you buy now with today’s interest rates rather than waiting a year or more.

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Properties Available for Sale in Philadelphia:

2. Home Prices are Expected to Rise

The Q3 Home Price Expectation Survey of 2021 surveyed more than 100 real estate experts and economists nationwide and they predicted that home prices will appreciate 31.8% through 2025. This means two important things:

You could pay tens of thousands of dollars more for a home than you would if you purchased it right now. Let’s say a home was listed for sale in January 2021 for $350,000. That same home could be listed for about $391,000 in 2022. Fast forward to 2025, you could be paying about $461,000 for that same home if the appreciation trends continue. This example is credited to Keeping Current Matters.
If you are currently renting and do not own any property, you are missing out on building so much equity. In the above example, a home could appreciate more than $100,000 over the next four years. That’s equity that you’re missing out on building for yourself.

Listings that Just Hit the Market:

3. Rental Rates are High and Could Be More than a Mortgage Payment

It’s understandable that not everyone is in a position to be able to purchase a home and renting is a good solution while you are building financial wealth in order to be able to eventually purchase a home. However, if you are in a place where you could afford to buy a house, do it now! Here are a few reasons it’s better to buy than rent:

You landlord will likely increase your rent payment each year. The only person that is helping is them. You are helping them pay their mortgage and build their equity. With a mortgage payment, you can decide on a fixed rate for the next 15 to 30 years and not have to worry about it changing.
Some mortgage payments are cheaper than rent payments. According to realtor.com, in July 2021, the median rent in Philadelphia was $1,635. And in many large cities including Philadelphia, monthly mortgage rates for starter homes are 15.5% ($216) lower than renting, on average.
You have more flexibility with owning your home. You can make any upgrades, repairs, cosmetic changes, and choose any decor that you want without having to get permission from your landlord.

Our Top Picks for First Time Home Buyers: