Better Homeowners
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The Opportunity Cost of Delaying Homeownership - 7/23/2025

Opportunity cost is the value of the next best alternative that you give up when making a decision. In real estate, this concept plays a crucial role for buyers who are delaying to purchase a home due to high interest rates and rising home prices. The question is: What is the cost of waiting?

Many potential homebuyers remain on the fence, choosing to rent instead of purchasing a home. However, by doing so, they may be missing out on one of the greatest wealth-building opportunities: home equity. Let's break it down.

Comparing Renting vs. Buying

Consider a renter paying $3,300 per month versus purchasing a $400,000 home with a 10% down payment and a 30-year mortgage at 6.76% interest. The total monthly mortgage payment (including principal, interest, taxes, and insurance) would be $3,526.68—higher than rent at first glance. However, this doesn't account for the financial benefits of homeownership.

  • In the first year:
    The homeowner reduces their loan principal through mortgage payments, averaging $587.57 per month in principal reduction.
  • The home appreciates at 3% per year, equating to $1,000 per month in gained value.
  • Factoring in $2,000 in annual maintenance costs, the true cost of homeownership is reduced to $2,374.23 per monthless than the cost of renting.

Long-Term Equity vs. Investment in CDs

After 7 years, the homeowner will have built $165,062 in home equity through appreciation and principal reduction. Meanwhile, if the renter put $40,000 they have for the down payment into a CD earning 2.5% interest, it would only grow to $47,547...less than a third of the homeowner's equity.

The Cost of Waiting

The opportunity cost of continuing to rent instead of buying is significant. Even if interest rates or home prices seem high now, waiting means missing out on the long-term financial benefits of homeownership, including appreciation, equity buildup, and potential tax advantages.  Not to mention that home prices are expected to continue to rise because of the continued shortage of inventory and so are rental rates.

If you're on the fence about buying, let's discuss your options and look at a projection with your numbers to see if now is the right time for you. The numbers might surprise you!

Bill Hornsby Associate Broker / Agent Maximum One Realty Greater Atlanta Hiram, GA (770) 861-1003 207759 Real Estate is a relationship business, and I love to help people! My passion is to help you, and your family make the smartest possible decisions when selling, buying, or holding your real estate. I have been licensed since 1999. I still believe in the golden rule and treating people in the same way I would want to be treated. Using caring, personal service, I will provide care, competence, honesty, and integrity to my clients. I will provide an exceptional level of service before, during, and even after the sale. My clients are my top priority and I will do everything in my power to provide you with the information you need to help you, and your family make wise decisions regarding your real estate. I realize that you have many choices when it comes to choosing a real estate agent and I am always striving to make sure that I am your best choice. I am very honored and grateful to be able to say that the majority of my business comes from the many referrals I receive from my past clients. Thank you for referring me to your family, your friends, and your co-workers! I represent Buyers and Sellers with new construction homes, re-sales, first time buyers, move up buyers, foreclosures, short sales, land, farm, investment, luxury homes, commercial, and clients that want to downsize for retirement. My main objective is to provide you with such an outstanding experience that you just can't wait to tell others about me! Contact Me Visit my Website Send a Referral Subscribe to Newsletter