What It’s Costing You to Wait to Buy A House?

A lot of people right now see that the market’s kind of crazy and they’re like, I’m just going to wait and see what happens. They think, maybe I’ll buy a house in six months or a year once I’ve seen if things have calmed down a bit. But there might be a cost in that waiting! Let’s take a look at how much it’s costing to wait to buy that house.

How Do We Figure This Out?

There are lots of different ways to figure out how much home prices are going up by. You can measure average sale price, median price, sale price, average price, per square foot, median price per square foot, or you can index based on different parts of the town. Then what makes it even more complicated is whether you’re measuring it by monthly sales, quarterly sales, or early sales.

Now, to keep it simple for you, we’ve partnered with our friends over at the Cromford Report, where they research and publish real estate data in Arizona. Their yearly appreciation numbers for through September 2020 are as follows:

1. Cave Creek – 23.6%
2. Sun Lakes – 23.1%
3. Arizona City – 19.4%
4. Scottsdale – 19.4%
5. El Mirage – 19.0%
6. Avondale – 18.6%
7. Gold Canyon – 18.2%
8. Phoenix – 18.1%
9. Litchfield Park – 18.0%
10. Peoria – 17.3%
11. Queen Creek – 16.9%
12. Casa Grande – 15.7%
13. Gilbert – 15.6%
14. Fountain Hills – 15.5%
15. Tolleson 15.0%
16. Tempe – 14.9%
17. Apache Junction – 14.7%
18. Sun City West – 14.6%
19. Maricopa – 14.1%
20. Paradise Valley – 13.6%
21. Surprise – 13.1%
22. Laveen – 12.9%
23. Sun City – 12.6%
24. Goodyear – 12.0%
25. Mesa – 11.9%
26. Glendale – 11.9%
27. Anthem – 10.6%
28. Chandler – 9.6%
29. Buckeye – 9.0%

So, what does this mean for me?

For example’s sake, let’s take 15% a year appreciation onto the average sale price of a home in the Metro Phoenix area, which is $310,000. So, 15% appreciation will mark that price up by $46,500 next year, which ends up being $3,875 per month. That is what it’s costing you each month you wait.

What happens if things slow down?

Even if things slowdown, which they will eventually, it won’t happen overnight. Even if appreciation went down to 7.5% the home prices would then still be going up by $23,250 a year or $1,900 a month.

A few more caveats

First of all, it won’t always be like this. Things will eventually slow down and we’ll see the numbers return to the average of around 4%. There is also the chance that we are in for some sort of market crash or bubble. While we think that is unlikely, it is something that is still worth considering.

There’s also no cost that’s worth stressing yourself out or buying the wrong house over. Remember, it might take some waiting to buy the right house. With that being said, home prices are only half the picture. Interest rates really matter right now. So, even though prices are rather high, the affordability of homes is actually not that bad.