Like many really big decisions, it's never as simple as one answer. Everyone's circumstances are different with different nuances, challenges, complexities, ambitions, etc. Here are 12 of the biggest mistakes I see:
1. Real estate is hyper-localized, and everything about real estate decision-making is hyper-specific, it's not just markets, inventory, pricing, etc. Its hyper-localized on all the above and also on the individual's circumstances, finances, income, health, etc. Individuals need to take all of these moving factors into account when weighing up their options.
2. Rents rise. Almost always. Yes, there are periods when they come down, but over time they rise. Making your decision by looking at the basic rent v buy monthly cost right now is a mistake.
3. Few people stay in a home for more than 13 years. The 30-year-fixed-rate mortgage has us believing people stay in a home for 30 years. Not so!
4. Interest rates go up and down. In times of higher interest rates, refinancing to reduce interest payments later, is always an option, but an individual still needs to be able to afford the costs in the interim.
5. Real estate taxes, insurance, and maintenance costs rise over time. But these increases are always passed on to rental tenants too.
6. The vast majority of first-home buyers don't buy their DREAM home. Many who get their DREAM home buy it after a lifetime of savings and earnings often in their 60's and later.
7. Seek professional help. Impulse buying - or not fully educated buying - can be very expensive. A rental impulse is usually curable within a year. While not free - never forget moving costs and fees - buying mistakes can be costly. You must do your homework. And if you are not a real estate guru, tap into the knowledge and insights of a professional agent. There is a big cost - whether paid for by the buyer or seller - but that pales compared to much costlier mistakes many who 'go it alone' experience.
8. Seek opportunity at the time of purchase: Yes, that somewhat tired-looking home can be made much better with some paint and good taste. Lower your 'needs' a wee bit and you may be pleasantly surprised.
9. The compounding equity building of ownership - and associated tax savings - has its greatest value when started EARLY.
10. There is a cost to waiting. Almost always. Why? Because housing is an essential need and you will have to pay to live somewhere.
11. Cutting back a few 'extra expenses' to afford a purchase is a form of forced savings. While some may see this as pleasure deprivation, most would simply see it as wise.
12. While the world tells you to focus on ROI (return on investment) PPSF (price per square foot), DOM (Days on Market) and numerous other real estate investment measures, never forget the EPSF (ENJOYMENT per square foot). It may be the most important of all measures.
Thank you Leonard Steinberg of Compass New York for your insights.