Real Estate Column: The hidden cost of waiting

By Jeff Wiren, Principal Broker, Premiere Property Group, LLC for the Sherwood Sun

SHERWOOD, Ore. — What if I told you that home prices would be 10% higher next year, and perhaps 25% higher over the next five to seven years?

What if I also told you that interest rates would remain the same — or even increase another 0.5%?

The truth is, neither I nor anyone else knows if either of those things will happen. Realtors® can't predict future home values any more than mortgage lenders can predict future interest rates.

What I can tell you is that buyers frequently cite high home prices or high interest rates as reasons to postpone purchasing a home — often to their financial disadvantage.

To be clear, if you are not personally or financially ready for the responsibilities of homeownership, waiting is absolutely the right decision. Buying a home before you're prepared rarely ends well.

However, if you are financially ready, don't let today's home prices or interest rates be the only factors keeping you on the sidelines.

While home prices can and do decline from time to time, history tells us those periods have been relatively uncommon. Since 1950, national home prices have experienced year-over-year declines only a handful of times, with most occurring during the Great Recession. Statistically speaking, waiting has more often resulted in paying more for the same home than paying less.

Interest rates deserve the same perspective. Significant changes in mortgage rates often create significant changes in buyer demand. If rates fall substantially, many buyers who have been waiting will likely re-enter the market at the same time. Increased demand combined with limited inventory can drive prices higher and create multiple-offer situations.

Conversely, periods of relatively stable prices and interest rates often provide buyers with opportunities to negotiate more favorable prices, repairs, and closing terms.

There is another important point to remember. If you purchase a home with a fixed-rate mortgage and interest rates decline in the future, you may have the opportunity to refinance. If rates increase, your mortgage payment generally stays the same. While market values may fluctuate in the short term, homeowners who plan to remain in their homes for seven to ten years have historically been in a much stronger position to weather those market cycles.

The hidden cost of waiting isn't simply higher home prices or higher interest rates. It's the possibility that the overall cost of homeownership may be greater in the future than it is today.

What about sellers?

I've counseled many homeowners who wanted to keep their current home as a rental because they believed prices would be significantly higher in a few years. While long-term appreciation has generally favored that strategy, the decision isn't as simple as collecting rent each month.

Rental properties require ongoing maintenance, repairs between tenants, insurance, property management, and careful planning for potential tax consequences. In addition, Oregon's landlord-tenant laws provide significant protections for tenants, making it important to understand your responsibilities before becoming a landlord.

Every situation is different. Sometimes holding a property as an investment makes excellent financial sense. Other times, selling today may be the better long-term decision.

The key is not trying to perfectly time the market. It's making the decision that's right for your financial goals, your family, and your future.

If you're thinking about buying or selling but aren't sure whether now is the right time, I'd be happy to sit down with you, review your specific situation, and help you evaluate your options. There is no substitute for a thoughtful conversation based on your individual circumstances.