3 Reasons to Delay Your Home Purchase
Everyone wants to own a home. Everyone tells you to buy a home. Why? Because it always goes up in value, of course.
While home values generally go up over the long term, most people do not understand the drivers behind home appreciation and all the expenses that come with buying a principal home. In my book, Master Your Mortgage, I advise that most people should think of their principal home purchase as a lifestyle purchase rather than an investment purchase.
My rationale was that a principal residence is not an investment based on the cash flow definition. As such, what most people are buying is a type of lifestyle based on the cost of the mortgage required to purchase the home they wish.
It’s why delaying your principal home purchase can be a good thing and most shouldn’t feel rushed to purchase a home early in life, especially with home prices and mortgage debt continuing to take a larger portion of most people’s income. Here are my top three reasons for delaying a principal home purchase.
1. It provides you with a greater opportunity to have more enriched experiences
When we are young, and by young, I mean below 35 years old, we tend to live more in the moment. Things such as starting a family, retirement planning, or death are not really in our thoughts.
Depending on the country you live in, the age of majority might fall between 18-22 years of age. You will undergo many personal transformations at this stage of your life. You will embark on a self-discovery, with some taking traditional paths such as college while others are taking non-traditional approaches forward. Regardless of the pathway, cash will be necessary. To make matters worse, this is when you will earn the lowest sum of money while building up your skills to eventually set yourself up for higher income later in your life (hopefully).
Buying a principal residence at a stage when you’re likely early in your career and still on your self-discovery journey will limit the opportunities you can part-take in to understand the world and yourself better. It reduces your options to say you are a homeowner to your peers and family.
Rather than buying a principal home immediately in the lowest earning years, focus on taking advantage of your lack of expenses and obligations to better understand what you want from this life and get to know a little more about yourself.
Go travel or participate in career or family experiences that bring joy to you. The home will be there when you get back, as people will always be looking to sell their homes. But since your time is limited, some experiences might not present themselves again, and some experiences are best had when you are at this early stage of your life to set you up for a great 3rd and 4th quarter of your life.
2. Delaying your home purchase will provide you with greater career opportunities
Buying a home tends to keep you grounded. When you buy a home, you tend to start looking for jobs only within that area. However, the best way to make more money is to have a greater radius from which you are willing to work when looking for a job. It’s why the whole work from home was a big thing during Covid-19 and continues to be a significant factor moving forward.
When you delay buying a home, you can focus more on your career and secure higher income levels as you don’t have the restriction of being grounded in a particular way by the home you’ve purchased. You can move halfway around the world and work in a department that you otherwise would not get the opportunity to do if you bought a home as you would be grounded, and there might be more senior people in those roles already in your area.
Having the flexibility to move quickly and not be stuck in a particular area means you can seek jobs that others within your area cannot because they have a home. As such, you might be able to earn more than some of your peers during these early years of your life while also building up a strong resume at the same time. Some companies might even offer to cover part or all of your housing costs while working further away, which is a bonus.
3. Buying a home later allows you to understand the actual cost of homeownership better
We tend to act more on our emotions when we are young. The rationale for this is the often-quoted Drake saying YOLA. Unfortunately, many of us will live much longer than we anticipated. As a result, the emotional decision we didn’t realize we would have to live the consequences of end up being decisions that we regret later in life.
A principal home purchase is a cash flow sucker. You give up cash flow in hopes that the value will exceed your initial purchase and ongoing operating costs. The problem with buying a home early in your life is you may not know how much your expenses might change, yet you have locked in a large portion of your fixed expenses for the next 25 years. A mortgage payment of $2,000 a month might not seem bad when all you have to do is pay for your home and perhaps go on a few trips here and there. However, that same $2,000 will feel different if also you have to pay for daycare at, say, $1200 when you are still earning more or less the same income.
The lifestyle you have in your early to mid-20s can be completely different from the one you may have in your late 20s, 30s, 40s, and so on. It’s often why people start in a condo and end up looking for a townhouse or detached home. Suppose you delay purchasing the home until you have a better sense of what your actual lifestyle will look like and the expenses that accompany that lifestyle. In that case, you can avoid the house upgrade scheme and purchase a home when you have a clear sense of what your long-term lifestyle will include, which will help you better buy a home that will fit your budget and the lifestyle you wish to live.
Delaying a home purchase allows you to have more experiences in life to see if there are things you might want, such as starting a family, perhaps living abroad, or starting a business, that will better inform you on the actual expenses of buying a home entails.
Learn to be comfortable with your decisions that might make others uncomfortable
There’s a saying misery loves company. I’m not suggesting that people who bought a principal home are miserable but that sometimes people who are unhappy with their decisions may feel better knowing others have made similar poor decisions.
You are not required to buy a home at a certain age. Homeownership doesn’t have to define who you are as a person; certainly, you shouldn’t feel any pressure to use this asset to demonstrate success.
Take your time and focus on other areas and rest assured a home will be there when you feel ready and comfortable to take on that journey. Delaying your home purchase could be one of the smartest financial moves you make for yourself and your loved ones.
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