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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.

Dave/Maggie Smith and Julie Jones CRB, SFR, CLHMS Smith and Associates St Petersburg , FL (727) 452-8663 Julie Dave and Maggie Smith, Broker-Associates, bring a wealth of knowledge and experience to the table when working on behalf of their customers. They realize that buying and selling homes involves many important decisions and that you want agents with an excellent reputation who are honest and hardworking and who will communicate and be responsive throughout the entire process. · Sales totaling over $70 Million the past 6 years · RE/MAX Hall of Fame, Chairman's Club, and Platinum Club members · 30+ Years of Combined Experience and CRB, SFR, and CLHMS designations · Top 1% of the 9,000+ member Realtor organization in Pinellas County Prior to partnering with wife, Maggie, in 1995, Dave spent many years as VP and Managing Broker of several top tier real estate offices being honored as "Manager of the Year" repeatedly and earning the admiration and respect of his peers. Dave previously served as Director and Secretary for the St. Petersburg Association of Realtors, two time Secretary of The Greater Clearwater Association of Realtors, Director of the Florida Association of Realtors, Member of FAR Honor Society, Member of Who's Who in Real Estate, and a Member of the Professional Standards Committee. Dave is an excellent problem solver, negotiator, and out-of-the-box thinker when it comes to representing buyers and sellers in the most challenging real estate market in decades. Those who know him, know he has a great sense of humor. He enjoys golf, fishing and tennis. Maggie has been a licensed Realtor since 1983 and earned her broker's license in 1991. Prior to partnering with Dave in 1995, Maggie worked as a real estate agent at a small boutique firm where she specialized in outstanding customer service and satisfaction. Maggie loves showing houses and realizes the importance of being patient and really listening to what customers want and need. She enjoys walking, reading, tennis and cooking. About David Dave and Maggie Smith, Broker-Associates, bring a wealth of knowledge and experience to the table when working on behalf of their customers. They realize that buying and selling homes involves many important decisions and that you want agents with an excellent reputation who are honest and hardworking and who will communicate and be responsive throughout the entire process. · Sales totaling over $70 Million the past 6 years · RE/MAX Hall of Fame, Chairman's Club, and Platinum Club members · 30+ Years of Combined Experience and CRB, SFR, and CLHMS designations · Top 1% of the 9,000+ member Realtor organization in Pinellas County Prior to partnering with wife, Maggie, in 1995, Dave spent many years as VP and Managing Broker of several top tier real estate offices being honored as "Manager of the Year" repeatedly and earning the admiration and respect of his peers. Dave previously served as Director and Secretary for the St. Petersburg Association of Realtors, two time Secretary of The Greater Clearwater Association of Realtors, Director of the Florida Association of Realtors, Member of FAR Honor Society, Member of Who's Who in Real Estate, and a Member of the Professional Standards Committee. Dave is an excellent problem solver, negotiator, and out-of-the-box thinker when it comes to representing buyers and sellers in the most challenging real estate market in decades. Those who know him, know he has a great sense of humor. Dave enjoys golf, fishing and tennis. Maggie has been a licensed Realtor since 1983 and earned her broker's license in 1991. Prior to partnering with Dave in 1995, Maggie worked as a real estate agent at a small boutique firm where she specialized in outstanding customer service and satisfaction. Maggie loves showing houses and realizes the importance of being patient and really listening to what customers want and need. She enjoys walking, reading, tennis and cooking. Contact Me Visit my Website Send a Referral Subscribe to Newsletter