Is buying a home a good idea for a millennial? It’s a question that millennials, baby-boomers, and gen-xer’s are all asking alike. My thoughts about it all are based on real data of how the world actually works vs how you hope it would.
Whether you’re an entrepreneur or not, gone are the days where you work for one company for 25+ years, get a guaranteed pension at retirement, and live in one city for the extent of your entire career. Things change. You will likely change jobs several times throughout your career. You won’t get a pension and what’s social security? We’ll see about that.
The short version is this. A home isn’t the best solution for the AVERAGE American. Here’s why:
The AVERAGE American is living paycheck to paycheck. They have little to no savings. When something goes wrong in the house (as it inevitably will) how are you going to fix it? Credit/debt. Why? Because you don’t have the savings to pay for it. vs. if you’re renting as you “get your money right” when things go wrong, you call the leasing office.
Additionally, you need to be mobile and agile when you’re in the phases of building your wealth. What happens when the market turns and the value of your home decreases? What happens when you get laid off and need to find another career but the job you find is in another city? Great! Move! Well, you can’t, because the market is down and you can’t sell your home and take a loss and you most certainly can’t afford to keep the mortgage while you live in another city. But just find a great paying tenant to rent it out? That doesn’t always happen overnight and you’re responsible for the mortgage regardless.
Now if you’re not the average American and you can truly afford a house without being house poor, then it’s a different situation, but my stance on it being a great investment still remains firm:
There are way better ways to invest in real estate– and you living in the house & paying down the debt YOURSELF isn’t one of them.
It could pan out positively but it also could not. It all depends on you doing the math to determine if homeownership makes sense for you. Don’t just look at the upside, look at it from all sides!