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 online real estate services operated by News Corp subsidiary Move, Inc.
The proprietary report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain renters 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 price appreciation,” says Jonathan Smoke, chief economist for realtor.com®. “The problem is 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 period based on today’s dollars totals $217,726. Although some markets are more buyer-friendly than others, national data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of MSAs, buying a home produces a financial benefit of at least $100,000 over 30 years.
Ten markets offer an especially considerable upside to owning, with estimated 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 demand and limited supply. The potential long-term wealth in these areas is the greatest nationwide, and likewise, the long-term financial penalty for delaying ownership is substantial, due to price appreciation, escalating rents, and higher mortgage rates on the horizon.
“This analysis looks solely at the financial reasons 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.”
If you’ve got a helpful neighbor, ask if they will pick up your mail/newspaper daily. If not, contact the newspaper to stop delivery and tell the USPS to put a hold on your mail during the time you will be away. It’s a good idea to have a friend or neighbor come by and check periodically to be sure the newspapers and mail have stopped, just in case. Also, they can pick up any packages that have been delivered or materials that solicitors may have left behind.
Install a timer switch for a few lights inside and outside your house. One or two lights on a timer will give the appearance of someone being home. Outdoor motion detector lights also work well for security. Leaving lights switched on the entire time you are gone is a waste of electricity, and having lights on all night may draw even more attention. Check out your local home improvement store or online resources for a variety of timer options.
Despite a home loan rate uptick in early June, refinance applications held steady, clocking in at only one percent lower in volume than the same time one year ago. Loan applications to purchase a home were still 14 percent higher than the same time a year ago.