Buying a Home Young is the Key to Building Wealth
Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study of adults who turned 60 or 61 between 2003 and 2015 for their data set.
“Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.”
The full age breakdown is highlighted in this chart:
The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes.
Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range. The study results gave a great reason why this generation should consider buying instead of signing a renewal on their lease:
“As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations.
While people make the choice to own or rent that suits them at a given point, maybe more young adults should consider the long-term consequences of renting when homeownership is an option.”
If you are one of the many young people debating whether buying a home this year is right for you, visit us at hfamiami.com/homebuyers to learn about our first-time home buyers’ mortgage, low interest rates and up to $15,000 in down payment assistance.
Note, information in this post was derived from keepingmatterscurrent.com.