Buy Now, Thank Yourself Later
When’s the best time to plant a tree? Twenty years ago. When’s the next best time? Now. I know that sounds pretty sales-y, but hear me out. Waiting has its merits in many realms of life, and there are certainly times in real estate when waiting might be the better play.
But not now. All indications are that rates are not coming down any time soon. While the rate you pay for a loan is an important detail in the affordability of a property (and please know that I would never advocate for buying something you can’t afford) that rate is dwarfed by the power of time when you are holding a real estate asset.
What’s more, we are in a strong buyer’s market where supply is outpacing demand. Buyers have more choices in properties and more negotiating power, often offering both below asking price and also for seller concessions towards closing costs and more.
Here are three reasons to not wait.
Appreciation. It’s true: just 5 years ago, interest rates were under 3%. The house I’m writing from right now enjoys an astronomically low interest rate. I’m sure glad we did it. If you didn’t buy then, the next best time is now. But it’s not only the rate we enjoy that makes me glad we jumped when we did. We added time in the market, and in Columbus, property appreciation has averaged 4.5% annually over the last few years. By that math our purchase at $270,000 is now worth $336,000 and that doesn’t even factor in the loads of improvements we’ve made to the house.
Improvement. We’ve undertaken many projects in our house that have been immensely rewarding in terms of learning new skills and naturally improving the value of the home. We have bought a home that we could conceivably live out our years in if we chose to, and not only that, we achieved a literal dream come true of owning lakefront property. Our quality of life has improved. We love where we live; that translates to being happier people.
Options. Because we bought a property that has staying power in terms of value we have been able to leverage that value by borrowing against the equity that we have. Our HELOC (home equity line of credit) is a tool that we’ve turned to in order to do any number of things we couldn’t otherwise do, like, for example, buy more real estate. Just when we thought we couldn’t be any happier with a real estate decision, we surprised ourselves again by using our equity to buy a second home in South Haven, Michigan. Our dreams keep getting bigger, thanks to our real estate purchases.
I remember a friend telling me, 26 years ago, that the mortgage payment feels pretty hard right now but that it will feel a little easier year on year. He didn’t know how much that small bit of wisdom was both accurate and empowering. It felt like a lot back then, and relative to our income, it was. Don’t misunderstand: buying a home, whether it’s a first, second, or third, is a serious commitment that must be planned for and committed to. It’s not a thing to be taken lightly. But it’s a game changing move that can open doors and grow your financial dreams.