In July of 2017, the average purchase price for a single family home was $310,000. In July of 2018, the average price was $352,000! That’s a gain of 13%- meaning that if you found a house you liked in July of 2017 and decided to save a 20% down payment over the next year for it, you’d be trying to save $62,000- but that house would have gone up in value by 13%! Meaning that to buy that home the following year, you’d need to have $70,400. That’s an extra $8,400 you would have needed to save and your mortgage payments would be higher!
Thankfully, we are predicted to only go up 4% this year. Right now, the average purchase price for a single family is $330,000. If predictions are accurate, a home that sells for $330,000 today would sell for $343,200 a year from now. A 20% down payment for that home today would be $66,000. A year from now, that down payment would be $68,640- meaning you’d need to save an extra $2,640 for the EXACT same house AND your home payment would be higher since the payment price has gone up.
If you don’t know where you want to live, if you don’t know if you’ll stay in an area for at least five years, or if you’re unsure of your job situation, it may not be the best time for you to buy.
If you’re interested in buying and CAN buy this year, Buy. This. Year! By waiting to buy in a year (or more) so that you ‘save’ more, here are four ways that you can lose out- just by waiting!
ONE: Home values go up- which means purchase prices goes up- meaning that you pay more for same exact house.
TWO: If you had bought the home one year earlier instead of waiting, as those home values went up, you would have been gaining equity in your home (meaning that even if you WEREN’T making payments on the house, the value would go up, so the equity in your home would be even greater!)
THREE: You’d be losing a year of paying down principle, which you would do each month through your mortgage. Using our example of $330,000, you’d pay down about $4000 in equity on your home. Add to that the the fact that the value of your home would go up by $13,200, and you’d have gained $17,200 in equity in just the one year!
FOUR: If interest rates go up, it cuts down the price of what you buy! For example, if interest rates go up by 1%, you lose 10% of your shopping budget price.
All that being said…. if you can buy now and WANT to buy, don’t wait! Now isn’t the time to wait! Feel free to contact me if you have questions for your specific scenario!