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The Cost of Waiting to Buy

Updated: Feb 4, 2022

You might be thinking the market is too hot to buy right now. Maybe you’ll wait until there’s less competition. Maybe you’ll wait until interest rates are lower. Maybe you’ll wait until you have 20 percent for a downpayment.

As you consider when is a good time to buy a home, it’s smart to think about the financial impact. This includes the financial impact of waiting.

While we can’t predict prices and mortgage rates in a year, we can make some reasonable guesses. Here’s an example of what the cost could be if you’re looking at a house now that costs $600,000, using a 7% increase in housing prices in a year and mortgage rates increasing up to .07% over the year.

While we're using these increases as a baseline, industry experts estimate a range from 3% to 15% in home price increases, while 7% is in the middle of the forecasts for increases in interest rates. As reference, prices went up a little over 15% in both 2020 and 2021. While it seems unlikely and unsustainable for prices to continue at that rate, it's valuable to look at increases over a longer timeframe. The average increase in the 50 years between 1971 and 2021 is around 6% per year in Denver. With very low inventory, it’s hard to imagine low appreciation in Denver in 2022. The mortgage rate is harder to predict. The National Association of Realtors expects interest rates to go up 0.6% to 0.7% this year.

Using these numbers results in the mortgage payment going up 16% if you wait a year. If you want to talk through your specific scenario and how waiting might impact what you can afford, reach out!

Thanks to Lon Welsh, Founder and Chairman of Your Castle Real Estate, for sharing this table and the industry estimates for 2022.

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