Buying a home these days has its advantages and disadvantages. And waiting to buy a house has even more disadvantages than advantages. In this video, I’m going to talk about mostly the cons of waiting to buy a house. So let’s get right into it. So I would like to focus on the cons on waiting to buy a house. But before I do that, I wanted to give you some three advantages of buying a house. Whether you buy it now or later on, or when you buy when you are ready. So what are the three advantages? The first advantage is that you are not renting a house. Your rentals is not fixed, your landlord can increase your rent and they will increase as the house prices go up, your rents go up.

So by buying a house, you fix your monthly payments and you don’t have to worry about being evicted because your landlord can evict you after your lease is expired. But if you have your own house, only you yourself can evict yourself. The second advantage of buying a house is that the value of your house goes up even if you do nothing and just do minor repairs and upkeep of your house, in the long run, your house value will double triple by the time you come to 30 years. By the time you pay off your mortgage, your house should have doubled, if not tripled. So that’s a big advantage of owning a house versus renting. The third reason you want to buy a house, or the pros of owning a house, is that it is one of the best wealth-building tools out there. Buying a house is one of your biggest investments. And just for buying a house and doing nothing, paying your mortgage payment, taking tax advantages, whether you want it or not, you are building equity, you are building the wealth just for doing nothing, just for owning a home. So that’s the third advantage.

It’s a great wealth-building tool without you doing anything. Go to work nine to five or attend to your business, pay your mortgage payments, keep your house up and you’re building wealth. So let’s talk about the cons or the cost or the disadvantage of not only not buying a house, but the disadvantage of waiting to buy a house. And I understand that you may have to wait. You want to buy a house and you’re waiting because you have some reasons, I totally understand. And I’m not saying that by now you should buy a house, blah, blah, blah. But let’s say you’re waiting to buy a house. You really want to buy a house, but you’re waiting to buy a house because you have: personal reasons, medical reasons, financial reasons, maybe somebody’s going through a divorce. I know a friend of mine wants to buy a house, but now they’re going through a divorce. So they have to wait. Or you might have legal issues. You may have a business that’s not doing well, or something’s going on with the business.

So I totally understand if you have a reason to wait. And the cons that I want to talk about is that if you are ready, willing, and able to buy. You are ready to buy, you really want to buy, you have the money to buy and you still keep waiting. And one of the biggest reasons why people wait to buy is because they are chasing the market. They are thinking, “Oh, the market will go down, the prices will go down, interest rates will go down, my income will go up.” So if that’s the reason you’re waiting, then it’s costing you a lot of lot of money. So let’s talk about those. And I’m going to talk about two or three things, why it’s going to cost you a pretty penny. What I mean is going to cost you a lot. Sorry to say that, but you need to know this. So what are those skyrocketing costing you for waiting? For nothing. For waiting for the market to go down. For waiting for the best condition to buy a house, the best time to buy a house.

As you know, one of the things all of us Americans face is procrastination, and procrastinating to buy a house is a big, big disadvantage. So the number one thing that’s costing you for waiting is that assuming you are renting. So let’s say you are renting and you’re paying 3000 a month, which is pretty normal in Orange County, California. So if you are waiting to buy a house and you are paying 3000 a month in rent, that means in one year you threw away $36,000. Hopefully, that’s not coming from a down payment. If you wait two years in Orange County paying approximately 3000 a month rent, you just blew almost $72,000. That’s a big disadvantage. The second disadvantage of waiting is that while you are renting, you are not getting any tax write-offs of owning a home. I’m not an accountant, I won’t get into the details. But by buying a house, you have pretty decent tax write-offs, which you need to take advantage of. A lot of the investors who buy second homes, third homes, fourth homes, one of the sole reasons for them to buy these properties are tax deductions and tax write-offs.

And owning a home, your primary home, you get tax write-offs. But if you’re renting, you don’t have those. So the more you wait to buy, the less tax write-offs you’re getting. The other disadvantage is that in a rising market, and we’ve seen a rising market in home prices, is that by waiting as the prices go up, your down payment amount goes up. So your closing cost goes up, in a sense, as the prices go up. As I mentioned earlier, your rents will go up, they’re not stable. Home prices will go up. One thing you have to understand is that in case you’re chasing the market and I understand you may want to look for a deal because everybody wants a deal. I know when I go looking for a car or when I was looking for a car, I went to two or three or four dealerships to buy a car. But in the hot market, cars were not dropping, so I paid the market value. So you have to understand that in the long run, home prices will keep going up.

So even if you chase the market, in the long run, you lose by chasing the market, you lose by waiting. On average, statistically, home prices go up 4% per year. So that’s a great disadvantage. And if you’re renting and if you’re waiting, you’re losing the 4% appreciation that you’re supposed to get. And the biggest disadvantage of not buying is that home loans typically are 30-year loans. So the earlier you start, the earlier you pay off your loan. I told my kids to buy a house when they were under 30, so hopefully, when they’re 60, their mortgage will pay off. I bought my house when I was over 30, so my house won’t be paid off until I’m over 60. So the earlier you start the clock of paying off your mortgage, the more advantage you have. I wanted to explain to you the real disadvantage of waiting, and the best way to do that is to give you a scenario. And this scenario is actually a true scenario, and I’m going to walk you through the numbers. I have a client, a friend of mine actually wanted to buy a house two years ago and they are still waiting. They have not bought. So let me take you through the numbers so you actually understand what has really happened to them and is happening to them in real-time.

So back in 2020, they wanted to buy a house and they still have not bought. So in 2020, the medium home price was, according to the Census Bureau, the home price was $358,000 medium home price sold. Currently, in 2022, quarter four, the medium home price was $454,000. So let’s look at those scenarios on how it’s costing this person, the friend of mine who has not bought and who’s just waiting and waiting for no reason, chasing the market, how much it’s costing them. So let me take you through the numbers. The first number, obviously, is that the home price, the same home they would have bought in 2020 was $354,000 or $358,000. And now the same house is $454,000. That means they are paying for the same house $100,000, actually $96,000 more just for waiting and chasing the market. Of course, this is an unusual number because the market was very hot. But even in a normal market, that house would have gone up by $30,000-$50,000.

So for waiting to buy the same house, you would have paid $30,000-$50,000. In this case, they will be paying $96,000 more for the same house just for waiting and procrastinating. The other scenario is, if they would have bought that house for $358,000 in 2020 and they were going to put 10% down, they would have had to come up with $35,000 as down payment. Now that they are waiting and they’re going to buy now, assuming it’s 2022, the home is costing $458,000 the same house. That means the 10% down that they were going to put $35,000 down, now they have to put $45,000 for the same house. So they have to come up with 10,000 more out of pocket for the same house. That’s a big disadvantage.

The third stupid reason for waiting. Sorry to say that, but I really feel that procrastination is a killer of your wealth. So let’s look at the property taxes. In Orange County, the property tax is 1.1%, but let’s say for calculation it’s 1% nationwide. If they would have bought the house for $358,000 in 2020, they would pay approximately $3,500 a year on property taxes. Now that they waited two years and the prices has gone up so much for the same house, they’re going to pay about approximately $4,500 per year for the next 30 years and it goes up every year. So they are paying $1,000 more per year to start, and every year it goes up 2% or 3%. So that’s another disadvantage. But the fourth thing that I’m going to show you is going to be a shocker on your monthly payments. So let’s analyze those.

The mortgage payments on a house at $358,000, at approximately 4%, and back then, the interest rates were approximately 4%, actually less than that. But at 4% interest rate on a $358,000 house, when they would have bought, their payment would have been approximately $1,500 a month for 30 year fixed and that is principal and interest only. But now that they bought two years later, they still haven’t bought. But assuming they bought two years later, that same house is costing them $454,000. So the mortgage amount has gone up. The interest rate now is, I’m calculating at six and a half percent. It’s actually 7%. But I’m trying to be nice here and taking six and a half percent. So for the same house, they would have bought in 2020 at a 4% interest rate, the same house they are buying at $454,000 at six and a half percent interest rate.

Do you know how much the mortgage payment is? The principal and interest is $2,577 a month fixed. $1,000 a month more for the same house. Ridiculous. And why is it going to costing my friend this much? One word, procrastination. Waiting to buy a house, waiting to chase the market. You cannot chase the market. You don’t know what’s going to happen. So let’s say you say, “Okay, what if the market drops?” And let’s say the market drops, or there’s a market crash and you buy 20-30% below the market. Well, guess what? If there’s a big recession, if there’s a big housing crash, that means there’s turmoil in the economy. Maybe you lose a job. So what if you are able to buy right now and you lose a job, or some medical issue pops up, or you are a couple, or you have two brothers buying together, or your two sisters buying together?

Let’s say if one of the sisters can’t work because the recession is here, prices don’t just drop for any reason. There is a big disturbance in the economy. So if there’s layoffs, there’s recession, there’s stock market crash, chances are your income will drop. So the best time to buy, as I mentioned earlier, is when you are ready, willing and able to buy. So if you’re ready to buy right now, go ahead and buy. Doesn’t matter if they’re high prices, doesn’t matter if they’re high-interest rates. But in the long term, of course, you have to buy this only if you’re long term. That means you’re going to keep the house for at least 7-10 years or more. Then you cannot go wrong. Your home prices go up 4% on average, statistically every year. So your price will go up. Interest rate, yes, six and a half percent. If it drops to 4%, you can refinance. But on average, in the last 40 years history, average rates are approximately 6% annually. Yes, they have gone to 3%, but yes, they’ve gone to 12%. So 6% is high compared to two years ago or last year. But on average 6% is a good rate. So don’t chase the market. Don’t procrastinate because it’s costing you big time.