Home ownership is not for everyone all the time. Yep, home ownership is no longer the American Dream.
Back when the notion that home ownership was the path to wealth we had a number of factors converging to create an ideal environment. First, back then (pre-1990s) the primary type of mortgage available was a 30-year or 15-year fixed rate mortgage. So you couldn’t easily get yourself into trouble biting off more home than you could chew through the use of an alphabet soup (ARM, option, etc.) mortgage.
Second, you likely lived in that same house for decades, maybe even your whole adult life. So you had both forced savings and a pre-funded retirement spot. Last but not least, during a decent chunk of that time period, inflation was such that while your monthly fixed payments stayed the same, your annual income was rising with cost-of-living adjustments, meaning with each passing year your housing-debt burden was a smaller real percentage of your income. Put all this together and there is a recipe to create wealth.
Fast-forward to today and nearly every one of those points has been turned on its head.
So before you buy, make sure it’s right for you. Too many hard-working individuals feel pressured to buy when renting may well be the best financial option for the stage of life that they are in. In general, wait to buy until you can comfortably put 20% down, plan to live there at least five years, and that the purchase price is such that your all in housing costs (mortgage, property tax, insurance, upkeep) are no more than a third of your take-home pay.
Wall Street Journal