Waiting Too Long to Buy A Home?

I have a client who has been considering upgrading to a newer and larger home for nearly a year now. Every month or so he calls me and asks if I think now is the right time, or if home prices will drop even more. I have started to realize that quite a few potential home owners are using the same rational to put off buying a home. I guess I am just not convinced that this is the best strategy. Now, don’t get me wrong, I am all about being conservative, but my gut tells me that if you are in a position to qualify for a new home (and that is something you are planning on) you ought to get going on it, rather than hold off. If you are planning on buying a home and only holding on to it for a year then be my guest and sit on the sidelines. You are probably better to wait and see if prices will drop.

If, however, you are looking more long-term, then it is probably better to get into the home you are looking for sooner rather than later. Members of my Inner-Circle will remember that the NUMBER 1 RULE when purchasing a home is to treat your home as an investment. Remember, our first home is 95% investment. Our second home is something closer to 75% investment, and our third (and for most Americans our final) home is more like 25% investment. Unless you plan on remaining in your home for 15 years of more you need to treat it as an investment. Period.

So, why not wait? Well, first off let’s remember that our economy isn’t exactly booming right now. Interest rates will very likely increase, making that home more difficult to pay for. Second, as home values decline more people who have been previously “priced-out” will be back in the market, meaning that there will be more competition for the home you want. Third, as more buyers enter the market we will likely see home prices edge back upward (remember the supply and demand discussion from your freshman economics class?)

Here is another reason to stop waiting: Utah has a different Real Estate Market then the rest of the country. I have written extensively about the fact that while home sales have slowed we are not seeing the kind of losses that the rest of the nation is facing. The article I posted yesterday only confirms that while we are slowing, the market in Utah is still one of the stronger in the nation.

And another reason: Buy when you are ready—stop timing the market. If you are renting you are throwing money away. A family paying $750 per month in rent will loose $9000 just by waiting an extra year to see if the market drops much more.

So, if you are thinking about buying a home, whether it be your first or your next, I guess it is probably worth taking a serious look at why you are waiting. If you have questions about your specific situation just shoot me an email at jayhart@cottonwoodmtg.com