The Hidden Cost of Waiting: Why Now Is the Time to Buy a Home

by Michael Santiago

Everyone loves investing in things that appreciate over time—whether it’s rare coins, vintage cars, or fine art. But one of the most reliable wealth-building tools has always been homeownership. In today’s housing market, waiting for home prices or mortgage rates to drop might feel like the right move, but doing so could mean missing out on a major opportunity to build equity in a rising market.

The Current Housing Market at a Glance

Home Prices: Home prices continue to climb in many markets, fueled by high demand and limited inventory. According to the Federal Housing Finance Agency (FHFA), home prices rose by 3.1% nationally in Q3 2024 compared to the previous year, and many experts predict steady growth into 2025.
Mortgage Rates: Rates have stabilized but remain elevated, hovering around 6.74% for a 30-year fixed-rate mortgage, 6.12% for an FHA mortgage, as per Freddie Mac and at 6.15% for a VA loan.

The Power of Home Equity

Home equity is the portion of your home you own outright—essentially, your stake in a valuable asset. As home prices rise, so does your equity, creating a critical wealth-building mechanism for homeowners. Here’s why waiting could cost you:

Rising Prices Increase Equity: Home prices are expected to appreciate steadily, meaning buyers who act now can benefit from this growth. A $400,000 home appreciating at a modest 3% annually could gain $12,000 in value in just one year. Waiting to buy could mean forfeiting these gains.
Mortgage Paydown Adds to Equity: Each mortgage payment builds equity as you reduce the loan balance. Delaying homeownership means losing out on these contributions to your net worth.
Missed Opportunity to Leverage Low Inventory: The limited supply of homes has created a competitive market. When rates and prices fall, buyer demand typically surges, leading to bidding wars that could drive prices higher, eroding any perceived savings.

Historical Trends: When Prices Drop, Competition Rises

A lower interest rate environment often brings more buyers into the market, increasing demand for limited housing stock. This typically sparks bidding wars, driving prices higher. For example:

During the 2020-2021 pandemic housing boom, historically low interest rates created intense competition, pushing prices up by over 18% year-over-year in some markets.

Delaying your purchase could mean entering a more competitive environment down the road, where the same homes may cost more due to increased demand.

30-Year Mortgage Rate Trends (2010–2024):
Mortgage rates fell dramatically during the COVID-19 pandemic, reaching historic lows near 2.7% in early 2021. Rates began climbing in 2022 due to inflationary pressures and Federal Reserve rate hikes, peaking at around 7.1% in late 2022. As of November 2024, the average 30-year fixed mortgage rate is 6.84%, reflecting a modest decline from its peak.

Home Equity Growth (2020–2024):
Between 2020 and 2023, U.S. homeowners gained significant equity due to rising home values. In 2021 alone, the average equity gain per homeowner was approximately $64,000. This trend continued, albeit slower, into 2023 as price appreciation cooled but remained positive.

Housing Inventory Levels (2018–2024):
Housing inventory has been declining steadily since 2018. The pandemic exacerbated this trend, with a 40% drop in available homes for sale between 2019 and 2021. Inventory remains constrained as of 2024, hovering near record lows.

Expert Predictions for Rates and Inventory

Mortgage Rates Likely to Stay Elevated

Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), predicts that while rates may inch lower by late 2025, they are unlikely to return to the historically low levels seen during the pandemic. This prolonged period of higher rates may solidify today's prices as a baseline for future growth.

"Waiting for the 'perfect' market conditions is a strategy that often backfires," states Michael Reynolds, Chief Economist at Urban Property Research. "Home equity is a powerful wealth-building mechanism that compounds over time."

Inventory Remains Scarce

The current housing inventory is 47% lower than pre-pandemic levels, according to Realtor.com. With fewer new homes being built and many homeowners locked into low-rate mortgages, the supply of available homes is unlikely to significantly improve soon.

Dr. Elena Rodriguez, Chief Economist at Urban Property Research, states: "The current real estate market rewards proactive investors. Waiting for theoretical perfect conditions often results in missed financial opportunities."

Key Takeaways for Homebuyers

Equity Growth Now: By buying in today’s market, you stand to gain from price appreciation and mortgage paydown, both of which build equity.
Bidding Wars Later: Waiting for rates and prices to fall could mean facing fierce competition, potentially driving up home costs even further.
Stability in Rates: With rates unlikely to drop significantly until after 2025, buyers can lock in today’s rates and refinance later if rates decline.

Actionable Recommendations

Investing in Your Future

Just as antique furniture, vintage cars, and rare collectibles can grow in value over time, so too can your home. But unlike these items, a home also provides a place to live, grow, and create memories—all while building financial security.

If you're ready to start building equity, don’t wait for the market to change. The time to buy is now. For a deep dive into these trends and how they may affect your buying or selling strategy, visit mikehomesweethomes.com today.