How old were you when you bought your first house? If you’re not yet a homeowner, how long have you been thinking seriously about buying a home, if you have at all? The median age of a first-time homebuyer is 32, with a median income of $72,000, so if you bought a home at a younger age, you’re slightly ahead of the curve.
But what about everyone at the median age and above? What made them wait to buy a home? Many young adults (under the age of 30) believe they may be “too young” to buy a house, but is this a legitimate concern? And if so, what’s the “right” age to buy a house? Is it 32, as the numbers suggest?
What Stops Young People From Buying a Home?
Let’s take a look at the limiting factors, both real and perceived, that keep young people from investing in a home:
- Homebuying experience. First, some younger people are intimidated by the fact that they don’t have any homebuying experience. A home is a purchase worth in excess of $100,000 (in most cases), and is meant to last you at least several years. Rushing into a decision with no experience can be intimidating—after all, what if you pick the wrong house? While this is understandable, it can also be easily overcome. The solution is to learn as much as you can about homebuying, so you don’t make a bad decision, and if you’re still worried about your own abilities, talk to and work with people who have the experience you lack. Chances are, your friends, family, and realtors will be happy to help you in your decision.
- Young people also worry about money. The cost of owning a home is frequently seen as more than renting, and on top of that, not all young people are financially equipped to make a down payment. While in some cases, this may be true, a simple look at a mortgage calculator will usually show that monthly mortgage payments are rarely more than your average rent prices in a given area. You may have to pay a bit more—in repairs and maintenance—but not by much.
- Not knowing where to begin. According to On Q Financial, “one common reason for younger adults choosing to enter the homebuying market later is a kind of decision paralysis. They don’t know where to start, so they never take the first step.” Fortunately, the first step is easier than most people think; all you have to do is start looking at houses. You don’t have to make your decision in a day, or in a month. All you have to do is start looking.
Why Buying a Home Younger Is Advantageous
Assuming it’s possible to overcome these limitations, is really advantageous to buy a home young? It can be, with three main benefits:
- Appreciation value. The average home appreciates at a rate between 3 and 5 percent, depending on the neighborhood and how well it’s maintained. Investing in a house 10 years earlier will give you 10 years of additional compound interest power, which could easily double the value of your investment.
- When you pay for rent, you aren’t getting anything in return. You’ll leave your apartment or home with no real value. When you pay for a mortgage, you’ll be building equity, contributing to full ownership, so you can eventually sell the property. Every month you spend money on rent may be wasted.
- The longer you’ve bought and owned homes, the better homebuying and homeowning decisions you’ll make. Starting younger means making smarter decisions when you’re older.
How to Start Looking
One of the top reasons for young people to delay homebuying is not knowing how to start looking. So what should you do to begin?
According to Michael Bluejay, you should “look at lots of houses! You’re not shopping for socks. You’re going to be pretty much married to this house. I can’t stress enough that you should take your time with your decision.” The best way to know what you’re looking for is to go out and look. Work with a buying agent if you can, search major sites like Zillow and Trulia for real estate in your area, and attend open houses. The more homes you see, and the more immersed you are in the homebuying process, the more sense everything is going to make.
Categories: Real Estate