There are 3 ways first time buyers lose money by waiting to purchase a home.
1. Lost tax deductions. If you don't have a mortgage you will pay more federal and state taxes. The amount can be staggering, and the savings goes to you and not to the government.
2. Wealth accumulation. You create equity by paying principal on your loan and through property appreciation. The Federal Reserve said the average homeowner had a net worth in their home of $60,000, or 1/3 of their total wealth. A $200,000 property has to drop in value by 30% to lose that much equity. And you lose about $6,000 per year in potential wealth accumulation if you wait to buy the U.S. median priced home! And thats a lot less wealth gain than in our Southern California market.
3. Increased interest rates. If a rate goes from 6 to 7 percent on a $200,000 mortgage, That increases your house payment by $1,578 per year, or a loss of $7,578 a year in payments and the above wealth accumulation.