With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today's market have become very steep, according to the inaugural Opportunity Cost Report released recently by realtor.com, a leading provider of lonline real estate services operated by News Corp subsidiary Move, Inc.
The propritary report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain reenters forego in waiting to buy and the financial benefits of homeownership by market.
"Current market conditions give buyers the opportunity to build substantial wealth in the long term, compared with renters and later buyers, in advance of the projected increase in mortgage rates and continuing prive appreciation," says Jonathan Smoke, chief economist for realtor.com. "The problem id inventory is low, which has many would-be home buyers - especially first timers - standing on the sidelines and missing out on potentially material financial gains."
Nationally, the estimated wealth an average buyer would accumulate over a 30-year financial gains above $500,000, and opportunity costs of waiting three years as high as $200,000. These MSAs, in California and other Western states, are relatively expensive markets with strong housing demands and limited supply. The potential long-term wealth in delaying ownership is substantial, due to price appreciation, escalating rents, and higher mortgage rates of the horizon.
"This analysis looks soely at the financial reason to buy a home, based on assumptions about rising mortgage rates and changes in home values," Smoke says. "It's important to remember that a home purchase decision is deeply personal. Potential buyers need to consider factors such as upcoming life events, job security, and potential relocation, in addition to financial benefits, because they too can have a significant impact on ownership."
For more information, visit www.realtor.com.
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