Fear of Buying
Polls and surveys of different age groups consistently say the same thing - renters are afraid they'll never own their own home. There are a variety of reasons cited including: lack of affordable housing, bad credit and college debt. The increase in interest rates is certainly not helping the situation.
Many renters are worried they can't afford a mortgage, and don't realize they're paying their landlord's mortgage instead of their own. Many want their forever home NOW, but can't afford it now. There is a broad lack of understanding about how important buying a first home is when it comes to wealth building.
Let's use my experience as an example.
My husband and I bought our first home in 1999 when interest rates were between 8-9%. The sales price we negotiated on our first home was $400,000 and we put 5% down and acquired an 80% first mortgage and a 15% second mortgage which allowed us to avoid PMI even though we didn't have 20% for a down payment. Our interest rates were about 8.325% and 8.625% and our closing costs were about 2.5%. We did a home inspection and received a $2500 seller closing cost credit in lieu of repairs. Here's a summary for those who don't like story problems:
Costs:
Sales Price - $400,000
Closing Costs (2.5% of sales price) - $10,000
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Total Cost to buy the home - $410,000
Payments:
First Mortgage from Bank- $320,000
Second Mortgage from Bank - $60,000
Closing Cost Credit from Seller - $2500
Cash to Close (Down Payment + Remaining Closing Costs) - $27,500
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Total Paid from all Sources - $410,000
So, for $27,500, we bought a $400,000 house which we lived in for about 5 years. We refinanced the mortgages when rates came down and were able to put those monthly savings into paying down the second mortgage by paying a little extra each month. We sold that house for $808,000. 
So by investing $27,500, we made $408,000 in appreciation in 5 years. We were able have a much higher down payment on our next home - a home we could not have afforded 5 years earlier.
If we had rented a house for those 5 years, we would not have had to pay the $27,500 cash to close, but we would have paid about the same monthly payments to rent a similar home for 5 years. And, we wouldn't have made $408,000 in appreciation. This doesn't even touch on the fact that we were able to write off all the mortgage interest payments we made over those years which means that the renters paid taxes on their income that went to rent while we as owners did not.
Would you invest $27,500 to make $408,000 in 5 years?
Not every home will double in price in 5 years. You should take a look at the neighborhood in which you are trying to buy and see what has happened historically. But very few homes lose value over 5 years. And by renting, you have no chance to building equity. Waiting to buy is rarely a great option when it comes to building wealth.
Don't have cash for a Downpayment...
I realize that not everyone has $20,000 for a downpayment. The example above showed a 5% down payment and you can purchase a home with a lot less. Today there are so many first-time home buyer programs available that offer down payment assistance, require smaller down payments, and even pay off your student debt if you stay in the home for 5 years. If you don't know about these programs and would like to, give me a call. I work with lenders who are very familiar with programs that can remove most obstacles in your way to home ownership. And I personally have the Housing Opportunity Certification (HOC) so that I may also help buyers who have obstacles, find a path to home ownership. So, let's talk.
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