I’m 23 and have been working for about a year now. I’ve been living at home but have recently began looking into moving out to my own place.
A lot of people in my life, specifically my Dad, are really pushing for me to purchase a house. I have about 70k saved up so I could probably afford it but after diving deeper and comparing rent vs buying in my area (Midwest United States) It has become clear that renting is the superior option. This thread is focusing on the financial side but also being young in my career having the ability to move around easily and not be tied to a mortgage is also highly appealing.
Here’s my logic:
To get a reasonable “starter” home in my area would cost me about 310k give or take. To be clear this would be a decent little house but definitely nothing nice enough to where I would want to stay long term.
Accounting for closing costs, PMI (as 20 percent would be all my money), property taxes, home insurance, maintenance, and whatever else it has become clear that renting and investing the difference is the superior option for building my wealth. Oh and not to mention paying almost 6.75% in interest on my loan. Buying a house would actively keep me broke.
Another huge part of this to mention is the down payment, assuming I put down what I can which (is realistically about 10-12 percent) I am locking up nearly 40k that could be invested in the stock market and starting to compound for me. This is a part not a lot of people think about since conventionally owning a home is seen as an “investment”.. you will be lucky to get more than a 3 percent annual return on your home where I live. In your 20s time is your most valuable asset and getting that money invested and begin to earn 8-10 percent a year in the stock market will Win. Every. Time.
I do want to own a home one day but I think rushing into it when you aren’t fully prepared can cause an immense amount of damage to your finances. Also obviously there are exceptions but I think this holds true for most Americans in their 20s.