Aug. 20, 2022
Buying your first house is no small task. In fact, it is probably one of the most intimidating things that most people need to face in their lifetime. The facts are simple. When you buy a house, you are agreeing to anywhere from 10 years to 30 years of debt that must be consistently paid on a monthly basis. Not just that, but those monthly payments often cost as much as half of your monthly pay. If that isn’t enough to scare you, consider the fact that you also need to pay insurance, maintenance, potential HOA fees, utilities, and more. The list goes on and on!
This extensive financial commitment is enough to scare many young people away, but should it? While there are a lot of scary factors that go into buying a house, there are just as many rewarding factors. From the pride of ownership to the financial empowerment of building equity, buying a house offers plenty of upsides, too. And also, if you are going to be paying the money for rent anyway, you might as well have it build you a little equity!
This post is going to look at what the best age to buy your first house is, dividing the focus between people that are 25 and under, people that are between 25 and 30, people that are between 30 and 35, and people that are above 35 years old. Within each age group, we will look at the financial advantage and disadvantages that would come with buying a home, as well as other thoughts that are relevant to each group.
This section might really stick out to you. How in the world could buying a house so young be a good idea? Is it even possible for a 22-year-old to buy a house? What crazy mortgage lender would allow that? And what 22-year-old has the money for a down payment?
These questions are all valid things to ask. And, to be fair, the average age to buy a first home in the United States is definitely not under 25. (In fact, it is 33…but more on that later!) The group of people that are able to commit to buying a house before they turn 25 is small, and the portion of that same group that is also willing to buy a house before their 25th birthday is even smaller. Still, some people can pull it off. Is buying a house before the age of 25 a good idea?
Advantages To Buying A House Before Your 25th Birthday
The single greatest advantage to buying a house so young is the earlier liberation from debt. Assuming someone buys a house at the age of 24, opts for a 30-year mortgage, and lives in that house for the full duration of the loan, they will pay it off before their 55th birthday. No, that doesn’t sound very young, but the average first-time homebuyer in 2022 will not pay off their home until they are over 60 years old! The second your mortgage is paid off, all else equal, you instantly unlock thousands of dollars per month of income that are no longer tied to paying off debt. This can unlock opportunities for early retirement or for additional saving down the line!
Buying a house at a young age also locks in its price at a typically lower level, as home values usually rise pretty steadily. Buying a house at 25 instead of 35 could mean spending tens of thousands of dollars less on the same house, meaning a higher overall return on your investment.
The third major advantage of buying a house before you turn 25 is the net savings you will attain over time. The average apartment renter in the United States pays over $1,300 per month in rent, which builds no equity for you. Over the course of 5 years, this equals a whopping $78,000! Imagine if that same money earned you 15% equity in a home that you could eventually sell!
Disadvantages To Buying A House Before Your 25th Birthday
The biggest and most notable advantage to buying a house before your 25th birthday is that you will be restricting some of your mobility and flexibility. While you can always sell a house, many homebuyers feel locked into a location once they purchase a house. Some 25-year-olds know exactly where they want to live for the rest of their lives, but many people who are early in their careers are still trying to figure out where to live in the long run. Buying a house makes moving to a new city or state much more complex than just finishing out a lease and signing a new one in a new place.
On top of that, taking out a mortgage at such a young age might be difficult. As most 25-year-olds don’t have extensive credit histories, lenders are likely to give them pretty high interest rates. On top of that, most 25-year-olds don’t have the savings to make a 20% down payment, meaning higher overall amounts of interest being paid and higher monthly payments.
Is The Best Age To Buy A House Between 25 And 30?
The average age to buy your first home in the United States doesn’t fall in this age group, either. While 30 might sound like a great time to buy a home, many homebuyers still decide to wait before making their big purchase. Some people would argue that this age range is the perfect time to buy a house, though. Why would that be?
Advantages To Buying A House Between 25 And 30 Years Old
Overall, the reasons to buy a house in this age range are pretty similar to the reasons in the under-25 group. Buying a home earlier locks in a lower price, allows you to pay off the loan at a younger age, and builds more equity in your home, sooner. Again, if 5 years of rent totals an average of $78,000, 10 years of rent totals over $150,000! The sooner you stop renting, the more you save in this regard.
While the advantages are similar, the means are different. It is unreasonable to expect a sub-25-year-old to have the financial means or capacity to buy a house. However, as you get closer to 30 years of age, your financial picture usually starts to get a little bit clearer. If you hit 30 years old and still can’t afford a house, there is nothing to worry about! The current prices of homes feel exorbitant, and there is no shame in needing more time to save up. However, many more 30-year-olds can afford a home than 25-year-olds, making this age group much more likely to actually sign on the dotted line of a mortgage.
Disadvantages To Buying A House Between 25 And 30 Years Old
This disadvantages to buying a house in this timeframe are also similar the disadvantages in the under-25 group, but there is even more context. The average age to get married in the United States is currently right in the middle of this range, meaning that having children is often not too far off. Where this can make things tricky is that you might not currently be in a position to buy a 3-bedroom house! While you might be able to afford a nice 1-bedroom home, this could very quickly become too small if you plan on getting married and having children. If you don’t want to go through the hassle of buying a home and then selling it a few years later to upsize, buying a home in this window of time might not be the best idea.
If you don’t plan on getting married or having children in this timeframe, or you can already afford a house big enough to accommodate those things, then buying a house in this timeframe is often a great idea. If you buy a house before you turn 30 years old, you will be able to pay it off on time before your 60th birthday. While this might sound old to still be making mortgage payments, it is still before most people retire, meaning you will likely at least own your home before you walk away from work!
Is The Best Age To Buy A House Between 30 And 35?
The average first-time homebuyer in the United States is around 33 years old, so most people would probably agree that this is the best time to buy a house. By the time you are in your early 30’s, you likely have some stability in terms of income and life situation. While not everyone that gets married has done it before their 35th birthday, a large portion have, and these people have a clearer picture of what to expect their financial situation to look like.
Advantages To Buying A House Between 30 And 35 Years Old
The biggest advantage of waiting to buy a house until you are in your early 30’s is clarity. By the time you are in your 30’s, you will likely have a clearer idea of what direction your career is headed and what direction your personal life is headed. You may be married, you may have children, you may have decided to stay single…the list of life decisions that can be made goes on and on. However, the clarity of what you want to do, both professionally and personally, is a great advantage that you often have when shopping for homes in this age range. If you have had strong career success, you might be making much more money than you anticipated and can afford a much bigger or nicer house than you would have thought in your 20’s. Or, on the flip side, you may have landed on harder times financially and not have the financial capacity to buy the home that you dreamed of.
Still, in both cases, the clarity of this age range empowers you to make a smarter decision for your future. Do you plan to stay single, and want a deluxe 1-bedroom home with all the modern upgrades? Do you plan to get married and have 7 children, requiring much more space? Whatever your angle is, your 30’s will likely at least provide a clearer path forward for you.
On top of the clarity, another large advantage for homebuyers in this age range is often stability. Whether you make more or less than you imagined, it is likely that by this point your income has at least stabilized a bit and you can more accurately forecast your expenses and debts. Also, if you began building your credit at a young age and practiced good financial habits, your credit score is likely significantly higher than it was in your early 20’s, which leads to much better interest rates and mortgage options.
Disadvantages To Buying A House Between 30 And 35 Years Old
The biggest disadvantage to buying a home in your early 30’s is simply the amount of time that was spent not building equity in the home. Again, 5 years of rent in the United States averages out to about $78,000. If you went to college and graduated at 22 years old, you will probably spend at least $120,000 on rent by this phase of your life. If you didn’t go to college and moved out right after your 18th birthday, you have likely spent at least $150,000 on rent by now.
While having a roof over your head is the most important thing, building equity with that money instead of pouring it right down the drain would be even better. Waiting until you are in your 30’s to buy your home means that over a decade of rent money has been spent that could have been gaining value, and you will now only pay off a 30-year mortgage after your 60th birthday. Making mortgage payments after you retire can be very hard if you don’t have a pension plan, so this should be avoided as much as possible!
Should You Wait To Buy Your First House Until After You Turn 35?
If you have read through this post up to this point, you have probably caught onto the idea that waiting to buy your first house is usually not the best idea. While there are advantages to buying your first house at a later age, those advantages are generally outweighed by the advantages of buying a house at a young age. While 35 years old is not that far above the average first-time homebuyer age in the United States, it is in many ways the least advantageous age on this list to buy a home. Below are some of the reasons why.
Advantages Of Waiting To Buy A House Until After You Turn 35 Years Old
The advantages of buying a house after 35 years of age are very similar to the advantages of buying a house in your early 30’s, but amplified. You likely have even more clarity now than you did when you were in your early 30’s, and your earnings have likely increased to a much higher point than when you started working over a decade ago. These are all good things. Between having the stronger financial capacity to buy a home and the clarity of where that home should be and what it should be like, this could be seen as the perfect time to buy a home.
However, just because it might be the perfect time to buy a home doesn’t mean that it is the perfect time to buy your first home. 35 years old is usually a great time to upsize or relocate if you need more space or a different pace of life, but waiting until your 35th birthday to buy your first home isn’t ideal. It isn’t a bad thing, by any means, but you also lose out on some of the major financial advantages that come with buying a house at a younger age.
Disadvantages Of Waiting To Buy A House Until After You Turn 35 Years Old
We touched on this above, but waiting to buy your first house until you are in your mid-to-late-30’s comes at a big tradeoff. While you will likely be able to afford a bigger house and a higher down payment, you also will miss out on years of potential equity growth. While having geographic flexibility in your 20’s and early 30’s is a great thing, it may come at the cost of tens of thousands of dollars of equity. Additionally, waiting to buy a house until after you turn 35 means that you will not be able to pay it off until after your 65th birthday, which is usually a time that people are retiring from work. Again, making mortgage payments on a fixed income after retirement is not ideal if you don’t have a pension, making waiting to buy your first home until your 35th birthday less than ideal in that regard.
At the end of the day, there is no perfect age to buy a home. That is why people ranging from 18 years old to 45 years old will buy their first home at some time this year. There are strong advantages to buying a house at a younger age, but those advantages also come with their own drawbacks. The same can be said for your late 20’s, your early 30’s, your late 30’s, and beyond. Really, it boils down to your own plans, goals, finances, and dreams.
If you plan to move around the country every few years, buying a home is likely not the best idea. On the flip side, if you know where you want to live in the long-term and are able to find work there, buying a house at a very young age could be an extremely advantageous decision. Similarly, waiting until you are 35 might mean missing out on potential equity for a decade, but if you are living in a small studio and investing your money elsewhere, you could see similar gains over that stretch of time. Really, the best age to buy a home depends on each person, as it will be the time when they feel like they have the clarity, financial capacity, and mental readiness to invest in a home. That time will be different for everyone, and that is a perfectly normal fact of life. If you need help with any of these aspects of the homebuying process, get in touch with a realtor who can help you along the way. While entering the homebuying market for the first time can be intimidating, a good realtor is able to take away many of those stresses while also ensuring that you find the right house for yourself, both in terms of life goals and financial limitations.
Thanks for reading our post about the best age to buy your first house. We know that buying your first house can be a daunting task, and for this reason many people put it off until as late as possible. If you visit Myrtle Beach or any other place in South Carolina and fall in love, we’re here to help. We at The Boyd Team are committed to helping you find the right property for your needs and dreams.Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email ateddie@boydteam.comor text or call us at (843) 222-8566, and we will get back to you as soon as we can. Beingtruenatives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market,whether buyingor selling, we can help you make your dreams a reality.
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