Maybe You Are Right… Don’t Buy That House

Many people are asking: why would you buy a house right now with the current market conditions? Of course, you don’t think I’m actually going to make a case for not buying real estate!

I’m hearing a lot of complaints from potential homebuyers:

• Real estate affordability is terrible
• The spread between renting and buying isn’t great
• Rates are likely to come down
• Prices are likely to come down
• Etc, etc.

There are so many “reasons” why people think they should be waiting. Quite honestly, many of these excuses for waiting to buy a home are always in place.

The Real Question: Why Should Someone Buy in This Market?

The truth is that affordability may be at an all-time low – it’s just more expensive to buy right now. But the thing that real estate is always about is the long game.

If you are thinking that you are going to buy a house and stay for a year or two before moving somewhere else… it doesn’t matter what the market is doing, you are going to put yourself in a position to lose money.

Keep the Long-Term Perspective in Mind

But longer-term, where are you planning to build generational wealth? Some people might have big business breakthroughs. But the vast majority of generational wealth that has been created in the US is through real estate. It’s the magic of time and amortization.

This is one of the biggest things that I buy into. Most people don’t work for the state or government, which means they aren’t going to have a pension. This means that you need to find a way to save for retirement. If you have a house that is paid off, you are probably going to need a few million dollars to live a comfortable life in retirement.

But if you don’t have a house paid off and go into retirement renting or with a big mortgage payment, then these numbers that you’ll need for retirement are going to be much higher. It’s a dangerous proposition!

You Can Always Fix the Rate Later

I get that it is a difficult time to get into a house. But remember that rates will come down over time and you can fix the rate later. I don’t buy the premises of a huge correction in the market, but it’s not impossible.

If prices go up by 3 – 5% this year. On a median home here in Temecula, priced around $700,000 right now, then it means that it will be $35,000 more expensive next year. That’s a lot of money that you are leaving on the table!

Remember, at today’s rates: every $10,000 is roughly an additional $700 in your monthly payment. So, if housing prices go up by $30,000, it is a $2100 increase in your monthly payment. You can always fix the rate later, but you can’t fix the price later.

If you are thinking about getting in the market now and you want to run the numbers with me, then reach out any time. I am here to help you find the best financial solutions.