Consumers Are Putting Off Home Purchases. Should You?

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  • Recent data shows that 21% of consumers had planned to buy a home in 2022.
  • Of those, 69% are now holding off.

It's not a good time to buy -- and it may be a good time to wait.

Owning a home clearly has its share of benefits. For one thing, as you pay down your mortgage, you get to build equity in a property whose value could rise over time.

There's also the stability to think about. When you rent a home, your landlord could opt not to renew your lease once it expires. That could put you in a situation where you have to uproot your life, bear the cost of moving, and potentially take on higher housing costs elsewhere.

But while buying a home can certainly be a sound financial decision, these days, it's become very difficult. And now, a growing number of people who had intended to buy a home this year are reconsidering their plans.

Buyers are getting spooked

These days, home buyers face two different challenges. First, there's sky-high home prices. Because housing inventory has lacked in a serious way, sellers have gotten away with commanding higher prices for their homes.

Second, there's costly borrowing rates. Mortgage rates have risen sharply since the start of the year, making it even more expensive to finance a home purchase.

Today's housing market is so difficult to break into that a growing number of consumers are delaying home buying plans. According to a recent Quicken survey, 21% of consumers had planned to buy a home in 2022. But now, of those who had intended to buy, 69% are either rethinking those plans or putting them on hold.

Of course, recession fears may also be playing into that decision. For months, financial experts have been warning that the U.S. economy could soon take a serious turn for the worse. As such, some people may not want to take on the expense of owning a home when there's the potential for widespread layoffs.

Should you delay your home-buying plans?

If you buy a home today, you're generally going to lose out by paying a higher purchase price and taking on a mortgage with a higher interest rate. That alone makes the argument to wait to buy. The exception, however, is if you're not in a great housing situation and you want to escape it.

Maybe your landlord recently hiked up your rent to an unreasonable degree, and you're now spending more money on a rental than what you'll spend on a mortgage plus other homeownership costs like property taxes, insurance, and maintenance. In that case, moving forward with a near-term home purchase could make sense.

Similarly, if you've outgrown your rental (say, you recently had a baby but you only rent a one-bedroom apartment) or your landlord does a terrible job of addressing issues and repairs, then you may decide to deal with paying a premium for a home and a mortgage if it means getting out of that housing arrangement. But otherwise, delaying your home purchase could mean getting to buy at a much more reasonable and affordable price point down the line. And it's easy to see why that might appeal to buyers today.

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