So you want to rent for awhile, eh? I hear it all the time. People who think they can rent for awhile and wait for the market to cool off so they can buy something later when the market cools. Unfortunately none of us has a crystal ball and none of us can time the market perfectly. Yet it amazes me that many people think they can do it all the time. No one would claim to be able to time the stock market so I’m not sure why they think they can time the real estate market. For years we’ve heard many well educated economists predict a market crash. Yet year after year, their prediction doesn’t happen. I’m not saying that the market will only go up because we know that all markets are cyclical. But the most educated economists are continually predicting the real estate market incorrectly. What makes it worse is when they suck the general public into believing that they can time the market and rent for awhile to take advantage of an impending softening of the market.
What usually ends up happening is that they are just delaying the inevitable home purchase and the market starts to run away from them. So now they can afford even less house than they could before. So by the time they have rented for awhile, they now have to accept something smaller than what they were first looking for. I’ve seen it time and time again, that people who wait to see if the market falls end up staying out of the market and wasting more money renting. When they buy into the market, they buy in at a higher price and have lost out on the appreciation they could have had over the years. As Will Rogers once said “Don’t wait to buy land. Buy land and wait”. Real estate is something that does appreciate over the long run so getting in as early as you can makes sense. Renting to wait out the market will only cost you money.