But owning a home is one of my dreams. I want to have children and raise them in a house, not some apartment.
This is quite understandable. I bought my current home to suit my children’s needs. We’re near a school and have a nice big yard they played in when they were younger. I can certainly understand why my sons and their peers want the same thing for themselves and their own families.
Unfortunately, today’s house prices are much higher relative to incomes than they were when I was starting out. For many young people today, stretching to buy the house of their dreams is a bad idea financially.
Does this mean the dream of owning a house is dead? Absolutely not. The path may be different from what it was for me and possibly more difficult, but there is still a way.
The first thing to realize is that Rome wasn’t built in a day. Most of my peers rented apartments for a few years before they bought a home. My own path involved renting apartments, then renting a row house before I bought my first house.
The key while in the renting phase is to save money. Owning a home comes with property taxes and significant upkeep and repair costs. Renters should be able to build savings while they rent.
Another thing to realize is that renting doesn’t necessarily mean living in an apartment. While it makes sense to start out with cheaper rents, it’s certainly possible to rent row houses or even a detached home once your income can support the rental cost.
If housing prices remain high for some time, millennials my end up renting longer than my peer group did, but that could change. For anyone who rents and builds savings, a housing crash could be the perfect opportunity to jump into home ownership. But you have to be saving a down payment to be able to take advantage of lower house prices.
There is nothing wrong with building a career and savings while renting progressively nicer places to live. You might even choose to rent a nice place to raise children. There is no need to put off having a family because you want to own a home first. The important barriers are income and savings, not home ownership. At some point while building a good life based on renting, you may benefit from a housing crash and jump into buying a home.
It’s hard to imagine how housing prices can keep climbing as fast as they have been. Who could afford to buy homes at double today’s prices? I know that sounds dangerously close to making a prediction, but we’ve had many cases of house prices dropping in the past, and there is no reason to believe it won’t happen in the future.