The Case for Buying Young

According to a new Urban Institute study, homeowners who purchase their first homes while young (under the age of 35) are better prepared for retirement come their 60s.

Urban Institute organized the study by surveying adults who turned 60 between the years of 2003 and 2015 by asking them at what age they first purchased a home. In a nutshell, the results show that the 60-year-olds of today bought homes at a much younger age than current homebuyers.

The data set showed that fifty percent of those in retirement age bought their home between the ages of 25-34.

Urban Institute/Keeping Current Matters

However, this study didn’t simply ask the age at which their first home was purchased. It also analyzed the impact buying young had on future financial security. It quotes, “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.”

Urban Institute/Keeping Current Matters

So what does this all mean?

In a nutshell, what this study shows is that a key factor in building wealth is the ability to purchase real estate at a relatively young age. This is a huge decision to make when it comes time to renew your lease.

Renting apartments, condos, and homes comes with a certain ease and flexibility to it. There is absolutely nothing wrong with renting. The saying goes that the right time to buy a home is the right time to buy a home. You may be 25, you may be 55– if it’s right, it’s right.

Just consider this, as we age into retirement, we will rely much more on our wealth than our income. If you’re weighing the long-term consequences of renting vs. buying and are wondering what your options may be, contact us today! We’d love to help you.