People are delaying the decision to buy a home because they are not
sure where prices are headed. If they buy and prices continue to soften, they
feel that they will not have purchased at the optimal moment. They reason that,
if they sit and wait, they can t be hurt. This thinking assumes that a
non-decision comes without consequence.
The normal retort to this thinking by people bullish on real estate is that
prices may soon turn to the positive or that interest rates will start heading
upward. Buy now before the cost of buying increases! Today, we want to
look at this from a different angle. We want to alert our readers that their
housing expense is about to increase if they continue to rent.
Currently, in most parts of the country, buying is less expensive than
renting. Plus, purchasers can lock in their housing expense for the next thirty
years by buying now. They will get a sensational price and a record low interest
rate. What will happen if they continue to rent?
The Alternative to Buying
If a family continues to rent, they are looking at
a housing expense which will rise with the market. Rental costs increase by 3% a
year historically. But today s rental market favors the landlord to a greater
degree. Below is a graph of how rental prices have increased recently and where
they are projected to go over the next few years based on a report from Marcus & Millichap.
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Bottom Line
Hoping to save by delaying the purchase of a home may result in higher
housing costs while you re waiting, thus achieving the exact opposite result.
Check with a local real estate professional to determine the best option for you
and your family.