Don’t Wait to Buy a Home

Don't Wait to Buy a Home cover picture shows brick homes on a street in summer with green grass and blue skies.

Don’t Wait to Buy a Home:  The Housing Market Outlook: Don’t Wait to Buy

As a Realtor, I’m constantly monitoring market conditions. Additionally, I’m fielding questions from clients about the right move. Recently, experts have been sounding the alarm – don’t wait to buy a home.

Don’t Wait to Buy a Home:  The Compelling Case to Buy Now

Despite high mortgage rates and rising prices, the consensus is clear. Moreover, waiting will likely cost you more in the long run. Aaron Hunt and Pam Amante of Avalon Group Realty  emphasized this recently when talking to a group of first time home buyers.

Pam stated, “We are expecting new home sales to rise again.” Furthermore, she called this “the sweet spot in the market.” Home builders have advantages driving sales. “A builder has tools,” she explained. “They’re using their tools and selling.”

Aaron broke down the builder’s edge. “They have scale and pricing power.” . Additionally, “they can offer concessions” that individual sellers can’t match. However, Aaron cautioned about first-time buyer struggles with high rates.

Don’t Wait to Buy a Home:  The Harsh Reality for First-Time Buyers

“People paying high interest rates without assets are struggling,” Aaron warned. Affordability remains a massive hurdle for newcomers to the market. Yet, the experts insist – don’t wait if you can buy now.

Aaron bluntly stated, “We don’t think you should wait.” Moreover, he cited Freddie Mac’s prediction of 0.5% home price growth through 2025. “If you can buy…we recommend it,” he urged. “We don’t see prices coming down soon.”

Don’t Wait to Buy a Home:  The Benefits of Getting On the Property Ladder

Pam echoed the advice to buy versus continuing to rent. “We don’t know anyone unhappy they got on the property ladder,” she said. Furthermore, homeownership gives you an asset and options down the road.

However, renting provides no reprieve from economic pressures either. As Pam noted, “Interest rates affect rents too – at all-time highs.”

Don’t Wait to Buy a Home:  The High Costs of Delaying Homeownership

Aaron summed up the three undesirable choices if you delay: “Live with parents, buy, or rent expensively.” Therefore, buying is the best long-term financial move if feasible.

Yet challenges persist beyond just costs and mortgage rates. Low inventory afflicts the market too. However, some relief may be coming from an unexpected source.

Don’t Wait to Buy a Home:  The Impending Housing Supply Wave

“We have an inventory problem despite the 4.7% increase,” said Aaron. Nonetheless, Pam highlighted a major supply boost on the horizon.

“Baby boomers will put 9 million homes on the market over 10 years,” she predicted. As such, this influx can help alleviate the housing shortage.

Moreover, boomers are motivated to sell as they downsize and retire. Therefore, eager buyers should prepare for these incoming listings.

Don’t Wait to Buy a Home:  Why Waiting Could Backfire Severely

Of course, some may still question if waiting makes sense. After all, couldn’t prices drop if the economy falters? Here’s my advice:

Trying to time the market perfectly is extremely risky. Furthermore, home prices have proven highly resistant to downturns. Even after the Great Recession, they quickly rebounded sharply higher.

Moreover, each year of delay costs in two ways. First, you miss out on building home equity. Second, rents keep rising alongside home prices. Therefore, the prudent move is locking in a fixed housing payment via a mortgage.

The miracle of compounding home equity is powerful over decades. Consequently, getting in sooner is better for long-term wealth accumulation.

Don’t Wait to Buy a Home:  The Rocky Spring Market Ahead

That said, spring is shaping up to be incredibly competitive. Conversely, lowered affordability is limiting the buyer pool and demand.

Mortgage rates remain stubbornly high around 6.5% on 30-year loans. Additionally, the Federal Reserve could hike rates further before pivoting.

Some buyers may get priced out as home prices keep climbing. On the flip side, many sellers aim for top dollar asking prices.

The resulting tension could lead to more price reductions this spring. However, a major housing crash seems highly unlikely given the shortage.

Moreover, some buyers are fatigued after losing countless bidding wars. This pent-up demand should continue fueling transactions despite headwinds.

Don’t Wait to Buy a Home:  Making Your Best Personal Choice

Ultimately, your unique finances and timeline determine the ideal move. For example, some may prefer paying notoriously high rents now. Then they’ll swoop in during the next housing downturn.

Additionally, others lack the savings for a downpayment currently. Delaying makes sense if you need years to build that reserve.

However, most buyers with sufficient income and savings should buy. Consequently, they’ll begin accumulating home equity and equity sooner.

For renters, paying someone else’s mortgage feels like throwing away money long-term. In contrast, your home loan payments build a valuable asset over time.

Don’t Wait to Buy a Home:  My Advice: Buy Now, But Carefully

In summary, I’m advising clients ready to buy to do so. Trying to perfectly time the market bottom is extremely difficult.

Moreover, each additional year of renting gets costlier. Mortgage rates will likely keep climbing too before peaking.

However, thoroughly weigh your personal situation first. Also, explore all loan options like ARMs to maximize affordability if needed.

Finally, don’t get caught up in fear of losses on paper. Homeownership is for the long haul of decades, not years. Real estate remains an excellent hedge against inflation too.

Don’t Wait to Buy a Home:  The Investment Perspective on Housing

From a pure investment standpoint, housing deserves serious consideration too. While residential real estate shouldn’t be viewed solely as an investment vehicle, the wealth-building potential is undeniable over long holding periods.

Real estate has handily outperformed stocks and other assets historically. Moreover, it provides a hard asset with utility beyond just price appreciation. Your home is where you live, not just a number on a statement.

Additionally, real estate performs particularly well during periods of elevated inflation, as we’ve seen recently. As such, it acts as a quality hedge against rising costs.

The Federal Reserve may succeed in taming inflation through rate hikes. However, even a 2-3% annual inflation rate is quite normal historically. Under that scenario, real estate should continue appreciating at solid clips.

Don’t Wait to Buy a Home:  Obtain Wealth

Most importantly, the powerful wealth accumulation from real estate stems from leverage. Taking out a mortgage allows you to purchase a much larger asset than you could buy outright with cash. This supercharges your returns when prices rise.

For example, let’s say you buy a $500,000 house with 20% down ($100,000). If that home increases 5% in value to $525,000 after a year, your $100,000 equity stake is now worth $125,000. That equates to a 25% return on your down payment investment!

Furthermore, you’re essentially using the bank’s money (your mortgage) to generate those large returns. This is why multimillionaires often utilize large, low-interest mortgages to expand their real estate holdings. The leveraged gains can be immense.

Of course, leverage cuts both ways during downturns. Home values depreciate faster versus your equity too. But over very long holding periods, the upside tends to drastically outweigh temporary dips.

Don’t Wait to Buy a Home:  Opportunity

From an investor’s viewpoint, the current high mortgage rate environment actually creates opportunity. You can lock in a higher interest rate for maximum leverage. As housing prices rise with inflation, that static mortgage payment becomes a smaller percentage of the home’s value.

So while high rates sting in terms of affordability today, they could benefit you tremendously long-term. Just be sure to obtain a fixed-rate loan to eliminate future rate risk.

Homeownership clearly has its drawbacks too, such as maintenance, taxes, and being inert. But overall, the wealth-compounding impact from real estate is incredibly powerful. It remains one of the most reliable paths to building multi-generational net worth.

Don’t Wait to Buy a Home:  The Bottom Line for Home Buyers

To wait or not to wait – that is the burning question. Most evidence points toward not postponing homeownership if viable.

Housing affordability remains very challenging, no doubt. Yet, delaying often proves even more expensive down the road. Conversely, the forced savings of a mortgage build wealth over time.

While never guaranteed, real estate has an incredible long-term track record. Consequently, following the experts’ advice to get on the property ladder makes sense.

As spring dawns, explore your buying options diligently. Having expert real estate guidance is also invaluable.

But don’t simply wait on the sidelines amid high prices and rates. Make your optimal personal move, rationally weighing all factors.

After all, the American Dream of homeownership should never become hopelessly deferred. Decisive action, not avoidance, is the wisest path for most prospective buyers.

If you are looking for a St Petersburg Realtor visit

If you are a Realtor and looking for a brokerage with top professionals and a warm and caring vibe visit

Check out this article next

Realtor In St Petersburg FL

Realtor In St Petersburg FL

  Realtor In St Petersburg FL:  Navigating St. Petersburg's Real Estate Landscape: Avalon Group Realty Leading the Way St. Petersburg, Florida, affectionately known as "St. Pete," is…

Read Article
About the Author
Rob Johnson
Realtor, St. Petersburg FL