Cost of Waiting to Buy in 2013
We remind our clients of this particular story frequently, as it illuminates why waiting is almost never going to save them more money:
In 2013, we had a borrower looking to buy in Oakland, CA and she was obsessed with getting the absolute lowest possible price.
As a result, she kept walking away from transactions because of $5,000 to $10,000 price discrepancies, even though she was shopping in the $650,000 range in what was becoming the hottest market in the country.
The $10,000 differences she quibbled over worked out to be less than $50 per month in payment. What is most interesting is that she waited so long that she was ultimately unable to buy in her desired neighborhood altogether, and she ended up buying in a less desirable suburb.
The houses she was bidding on are now worth twice what she was offering too. Her “cost of waiting,” or cost of not executing, was extremely high, to say the least. Unfortunately, her story is not unique.
Cost of Waiting to Buy in 2020
Despite the rate volatility we’ve seen over the last seven years, the demand for housing still remains very strong, and property values continue to appreciate at a surprisingly fast pace.
These factors combined (increasing rates and appreciation) make the “cost of waiting” as high as ever.
In a recent National Real Estate Post Video, at about the 9-minute mark, they use a $500,000 Orange County purchase as an example. At current appreciation rates, waiting even six months can cost a buyer at least an additional $100 per month, according to the article.
Waiting a year can cost over $200 per month.
Like what you’ve read? Subscribe & stay informed!
Sign up to receive our blog daily
Like what you read? Share this article with your network: