Better Homeowners
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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.

Karen Degney CRS, CNE, SFR, CDPE Sierra Sothebys International Realty Reno-Truckee-Incline Village-Tahoe, NV (775) 233-5521 NV. BS.0017798 | CA 01280552 Karen has worked as a full time real estate professional since 1999, has owned and operated 3 real estate brokerages in the Lake Tahoe area, is a Certified Previews Luxury Agent, and holds a Brokers license in Nevada and California. Her extensive background in property management provides crucial knowledge and expertise while working with investors. She is a Certified Residential Specialist Member (CRS) and currently holds designations in Property Management, Short Sales and Foreclosure Resources (SFR), Relocation, Certified Distressed Property Expert (CDPE), Certified Negotiation Expert (CNE) and is Veterans Association of Real Estate Professional (VAREP). The CRS Designation is held by only 3% of all REALTORS® nationally and is the highest designation a residential REALTOR® can hold. Also, and very important is the designation of Certified Negotiation Expert held by only 1% of all REALTORS® Nationwide. With these designations, combined with 20+ years of full time Real Estate employment, Karen has an edge that benefits you. She has the knowledge of how to obtain a higher sales price and better terms for you as a Seller, and as a Buyer, she has the skills to negotiate for the best price and terms on your pur- chase. A Message From Karen: My motto is “Never, Never, Never Give Up!” After all these years in Real Estate, it is still my passion. I still get a thrill working with first time home buyers as well as working with my return clients and the many referrals which I am privileged to re- ceive. I love my job and have worked full time in real estate since 1999. I am a highly motivated REALTOR® with the goals of my clients as my highest priority. I continue to attend educational opportunities and expand my knowledge to keep ahead in my pro- fession and learn of new technology to best serve my clients. I hope to put my experience to work for you, “A Tradition of Trust, Your REALTOR® for Life” Contact Me Visit my Website Send a Referral Subscribe to Newsletter