The Hidden Price You Pay When You Wait To Buy Your First Home
Written by
Heather Altamirano
Edited by
Zuri Anderson
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With high interest rates, low inventory and intense bidding wars, the housing market has been an unpredictable rollercoaster that has deterred many first-time buyers. While things are starting to shift, some are still sitting on the sidelines waiting for a stable market, but that could lead to significant loss.
“When it comes to buying real estate, the golden rule has always been: The best time to buy was yesterday, and the second-best time is today,” said Peter Diamond, a federally licensed tax, accounting, real estate, and structure and certified Bankability® expert.
There are several reasons why people wait to buy a home:
- Waiting for interest rates to drop
- Concerned about housing prices
- Saving up a bigger down payment
- Hoping for more inventory options
While those are valid, it could cost you big time. Here’s how according to experts.
Why Waiting To Buy Costs More Than You Think
It seems like a smart decision to hold off until rates and housing prices come down, but that’s not always the case.
“When it comes to real estate, waiting is rarely your friend,” said Yawar Charlie, director of estates at Christie’s International Real Estate of Southern California. “A lot of buyers tell me, ‘I’ll just wait six months, maybe prices will cool.'”
But the truth is, even a modest bump in prices or interest rates can cost you thousands every single month for years, Charlie explained.
The Real Impact of Rate Hikes on Your Monthly Payment
As a top luxury real estate agent in Los Angeles, Charlie has encountered a wide range of situations with clients, including those who didn’t take his advice and paid dearly for it.
For instance, his clients, Alex and Jordan, were renting in Silver Lake (a trendy East Side neighborhood in LA). They almost bought a home in 2022 when interest rates were just 3%, but waited, thinking they would drop more.
“By the time they got serious in 2023, interest rates had nearly doubled,” Charlie said. “Their monthly payment for the same type of home went up by about $1,200. That’s not just a latte-a-day kind of difference; that’s a brand-new car payment every month, gone.”
Another client of Charlie’s, Maria, was a first-time buyer in West Hollywood. She hesitated for just a year, hoping prices would soften. Instead, her dream condo jumped by about 0.2% a month nationally, the tiny increase the economists talk about.
“On a $900,000 condo, that adds up fast,” Charlie said. “Combine that with higher rates, and her payment is now nearly $800 more a month than it would have been-over the life of a 30-year loan. That’s close to $300,000 lost.”
Many first-time buyers watch the market and wait for rates to fall or for a so-called market crash that never came. Meanwhile, home prices have continued to climb.
Diamond has also had people who waited too long and paid the price. In 2021, his client could’ve bought a home for $500,000 with rates around 3.75%. With 20% down, his mortgage payment would’ve been $1,852 per month (excluding taxes and insurance).
“Fast-forward to today — that same home is now worth about $615,000, with rates closer to 6.1%,” he said. “The new payment? $2,981 [per] month, with an extra $23,000 required just for the down payment.”
Diamond noted that the 61% jump in monthly cost — over $1,100 more every single month — for the exact same house.
He explained, “Even modest price moves matter: A 0.2% increase on a $500,000 home is $10,000, which adds about $61 [per] month at today’s rates. For first-time buyers working with tight budgets, that can be the difference between qualifying for a loan or being priced out.”
Smart Moves and Financial Planning Tips
Fear and waiting can be very expensive in real estate, but planning and preparation reduce the anxiety of buying a home. Here are the financial planning tips Diamond recommends.
- Focus on Bankability®, not just credit scores. Lenders look at much more than a FICO number. Length of credit history, type of credit, cash reserves, and utilization all impact your approval and your rate.
- Keep funds seasoned. Down payments and reserves must be sourced. That means they’ve been sitting in your account for at least 60 days — lenders will verify this through statements. Avoid last-minute large deposits.
- Get familiar with the application process. Review Fannie Mae’s Form 1003, the standard mortgage application lenders complete. Knowing what’s on it helps you prepare clean, complete information: Past tax returns, W-2s, pay stubs, retirement and bank account statements, etc.
- Stay organized. The smoother your documentation, the easier your approval. Being prepared with tax documents, pay history and account balances saves time, reduces stress and makes you a stronger borrower.
“Time in the market — not timing the market — is what creates wealth,” Diamond said.
Final Take To GO
Hesitation in buying a home can cost more money in the end.
“Whether it’s a $900,000 condo or a $9 million estate, waiting usually means paying more, settling for less, or both,” Charlie said.
Diamond agreed and added, “The market doesn’t pause because you want to. Prices inch up, rates fluctuate, and suddenly, the place you loved is out of reach. Real estate rewards decisiveness.”
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