We’re planning for the big move that will happen in a few months. Part of that planning involves looking into housing options, which include both renting and buying. Considering that we live in the North East, where homes and property taxes are quite expensive, it has never been part of our plan to buy this early.
As we’ve been looking to rent a place, I’ve had trouble finding an affordable place to live in the neighborhood that we want to live in. We’re still months away, but I’m starting to believe we won’t find the perfect place by renting. It’s made us consider buying as an option, and ultimately question whether we are financially ready to buy a home. While I hate to throw money down the toilet, I’m still weary of buying a home at this time. I just don’t think we are ready yet. We’ve been doing well for the past two years – we’ve finally have found some ground to stand on, but that doesn’t mean we’re anywhere close to buying a home.
Reasons Not to Buy Too Early
Part of my reluctance stems out of experiencing many people close to me being “house-poor.” I’ve seen what it does to people – the stress that it puts on people, the limitations not only financially but also socially, and that’s only the beginning. Many young adults, when they start earning decent money, don’t think about losing it all. But, that’s exactly what could happen. You may think I’m being dramatic, but here are the things that you are putting yourself at risk to when you buy a home before you are ready.
Losing Your Job
Both my wife and I have good jobs. We’re not the highest income family by any means, but enough to be thankful for. Even though I feel secure about both of our jobs, that isn’t to say that our employment is guaranteed. We’re ambitious and we work hard at our respective companies, but things could take a turn for the worse and one or both of us could be let go. This might be worst-case scenario, but it’s still possible.
Owning a home would be significantly more devastating than renting in this situation. If one of us lost our job right now, while we are renting, we could still afford our rent and we have our emergency fund to help us through the worst of it. If it got worse than that, we could move to a cheaper place to live. If we owned a home, our living situation would be more concrete. In other words, we would be stuck. Forced to pay the mortgage payments, property tax, insurance, etc. While there will never be 100% guarantee that we won’t lose our jobs, there are a few things that put us, as young adults, at more risk than others.
- We don’t have a large amount of savings to protect us for a long time without jobs
- Both of us don’t earn enough on our own to pay all of our bills (including the costs of home ownership) without putting a huge strain on our finances.
- We only have a few years of relevant work experience. While I’m confident that both of us could get a new job within a six month period, we would have more security if we had just a few more years of experience.
Housing Market Crashes
Another possibility is that the housing market could crash again, making us owe more money than the house is worth. This would not only put a huge strain on us financially, but also restrict us from moving, should we choose to relocate again. Of course, we could rent out our condo if we were unable to sell, but again, there’s no guarantee. Since we are young and there’s still a slight chance that we could re-locate again, this puts us at an increased risk. In fact, regardless of whether the housing market crashes, we could be stuck in a home or forced to sell at a loss. While everyone is quick to point out how renters are throwing money away, hardly anyone emphasizes the importance of being able to pick up and leave without being tied down to a home.
The simple fact is that young adults are playing against the odds. There are too many things that could go wrong. Not only are you earning less money, have less work experience, and less savings than at a later age, but also more likely to move. If one thing goes wrong, you might be able to survive. If multiple things go wrong or one bad thing lasts for a long time, you could end up losing money or worse, lose your home. You may not think it could happen to you, but it’s better to be safe than sorry. That’s, at least, the logic that I’m living by and thus why we’re not pulling the trigger on buying a home just yet.