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For many people, buying a home is an important step toward the American Dream. But it’s also an expensive step — especially these days. Ten years ago, the average price of a house sold in the United States was $324,400, according to
Meanwhile, mortgage rates have soared to historic highs. In October 2023, the average rate for a 30-year fixed-rate mortgage
All these costs raise a question: Is buying a home still the only path — or even a viable one — to a sound financial future? One young Financial Planning reader has been struggling with this dilemma. He’s already saving and investing for his future, and a hefty down payment could take away from those efforts. But would owning a house or apartment be worth the sacrifice?
For advice, he turned to the experts. Here’s what he wrote:
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Dear advisors,
Is it worth it these days to buy a home, even if it means less money for my investments?
For context, I’m a 25-year-old engineer in Providence, Rhode Island. My salary is $67,000. To save for retirement, I set aside about $600 per week, which I divvy up between my 401(k), my high-yield savings account and an S&P 500 GARP ETF.
I’m happy with how these investments are growing, but sometimes I wonder if I should be using my savings for a down payment instead. Right now my girlfriend and I rent our apartment for $2,000 (just $1,000 for me), which leaves room for saving and investing. But am I neglecting to “build equity”? On the other hand, with mortgage rates so high these days, is building equity even worth it? Which should I prioritize — my investments or owning a home someday?
Sincerely,
Perplexed in Providence
And here’s what financial advisors wrote back:
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