Better Homeowners
Top Producers / True Professionals Since 1983

The Real Cost of Waiting to Buy - 7/16/2025

If you're holding off on buying a home because you think prices are too high or mortgage rates will drop, you might want to consider the opportunity cost of waiting. While it may seem like a safer choice to keep your down payment in the bank or invest it elsewhere, the reality is that homeownership provides a powerful wealth-building advantage, thanks to leverage.

While homebuyers may not approach their purchase with the same mindset as an investor, it's important to recognize that a home often becomes the largest asset they own. Comparing the potential wealth position of alternative investments, such as CDs or stocks, versus homeownership highlights the financial impact of delaying a purchase and the long-term benefits of building equity.

Let's compare what happens when you put $40,000 into different investment options over the next five years:

 

CD

Stocks

Home

Cash to Invest

$40,000

$40,000

$40,000

Yield/Appreciation

2.5%

7%

3%

Wealth Position end of 5 years

$45,256

$56,102

$126,211

Return on Investment

2.5%

7%

25.84%

Profit Taxed as

Ordinary Income

Long-Term Capital Gains

Exclusion Applies

 

Why Buying a Home is a Smarter Choice

  1. Leverage Works in Your Favor
    • Unlike CDs or stocks, real estate allows you to control a $400,000 asset with just $40,000 down.
    • When your home appreciates, the gain applies to the entire home value, not just your initial investment.
  2. Building Wealth Through Equity
    • With every mortgage payment, you reduce your loan balance, increasing your ownership stake in the property.
    • After five years, this builds up substantial equity that renting or investing elsewhere simply can't match.
  3. Tax Advantages
  • Gains from CDs are taxed as ordinary income, and stock gains are taxed as capital gains when sold.
  • However, real estate enjoys a special tax exclusion...homeowners can exclude up to $250,000 (or $500,000 for married couples) tax-free when they sell, provided they meet IRS residency requirements.

What If Interest Rates Drop?  Many buyers worry about locking in a 6.63% rate today, hoping for lower rates later. But if rates drop, you can always refinance to a lower rate while still benefiting from early appreciation and equity growth. Waiting could mean paying more if home prices continue rising.

Bottom Line: The Best Time to Buy is When You Can Afford It

If you have the down payment and qualify for a mortgage, waiting could cost you thousands in missed equity and appreciation. Instead of sitting on the sidelines, let's explore how homeownership can work for you.

The Alan Smith Team RE/MAX PROFESSIONALS Littleton, CO (303) 503-2526 98573T Alan J. Smith CRS, GRI Broker/ Owner RE/MAX Professionals Alan has been a licensed Realtor since 1983. He is one of the Broker/Owners of RE/MAX Professionals, and holds the CRS, GRI, CDPE, and CLHMS Designations which gives him expertise in all aspects of negotiating Residential Real Estate including as a Certified Luxury Home Marketing Specialist. He is also a CRB Candidate which specializes in Residential Brokerage Administration. After spending 10 years with Century 21 early in his career, Alan joined RE/MAX Professionals in January of 1994. Alan absolutely enjoys working with the best Realtors in the business and thrives with the Top Producers and True Professionals at RE/MAX Professionals. He is a member of the RE/MAX Diamond Award Club, and has been inducted into the RE/MAX Hall of Fame and received the Lifetime Achievement Award. Alan entered the Pinnacle of RE/MAX Honors in 2010 as he was inducted into the RE/MAX Circle of Legends. . He is a Broker/Owner of RE/MAX Professionals with 9 offices and approximately 500 agents. Alan is currently the President of Professionals Investment Group, d/b/a RE/MAX Professionals, and also served as the Chairman of the REColorado Board of Directors, and currently is a Director on that Board. Alan J. Smith RE/MAX Professionals 8500 W. Bowles Avenue, Suite 100 Littleton, CO 80123 303-503-2526 Cell 303-932-3306 Office alan@alanjsmith.com TheAlanSmithTeam.com Contact Me Visit my Website Send a Referral Subscribe to Newsletter