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Waiting to Buy a Home Can be Financially Disadvantageous.

When looking at historic data, the argument against waiting to make a home buying decision is persuasive.  Here are several reasons why waiting to buy a home can be financially disadvantageous:

Long-term Real Estate Appreciation: Historically, real estate tends to appreciate over time. For example, in 1971, mortgage rates were 7.33%. If someone had waited 22 years until rates fell in the early 1990s, they would have missed out on the significant appreciation in home values. During that period, many properties saw their values quadruple. By waiting, potential buyers would have faced much higher prices, reducing the affordability of homes even with lower mortgage rates.

Cost of Renting vs. Buying: Renting for an extended period often results in significant financial outflow without building equity. Over 22 years, renters pay substantial amounts in rent, which doesn’t contribute to their wealth. In contrast, homeowners pay down their mortgage and build equity, effectively converting their housing expenses into an investment.

Opportunity Cost: The money spent on rent could instead be used to build equity in a home. Over the long term, the equity built in a home can lead to significant financial benefits, including the potential for refinancing, taking out home equity loans, or selling the home at a profit.

Tax Benefits: Homeownership often comes with tax benefits, such as the ability to deduct mortgage interest and property taxes from taxable income. These tax savings can offset some of the costs of homeownership, making it more financially advantageous compared to renting.

Inflation Hedge: Real estate is often considered a good hedge against inflation. As inflation rises, property values and rents typically increase. Homeowners with fixed-rate mortgages benefit from stable housing payments, while renters may face increasing rent costs over time.

Forced Savings: A mortgage requires regular payments, which acts as a form of forced savings. This can be beneficial for those who might otherwise struggle to save money. Over time, these payments contribute to building equity in the property.

Stability and Predictability: Homeownership provides more stability compared to renting, where tenants might face rent increases or be forced to move if the landlord decides to sell the property. Fixed-rate mortgages offer predictable monthly payments, making it easier to budget and plan for the future.

In summary, waiting to buy real estate can lead to missed opportunities for wealth accumulation through home appreciation, equity building, and various financial benefits associated with homeownership. While market conditions and individual circumstances vary, the historical perspective shows that buying sooner rather than later can often lead to better long-term financial outcomes.

Lacrosse Homes works with a team of experienced mortgage partners who can assist you in finding the right mortgage product to make your home buying dream come true.  Connect with us today to make your move!