From the Wall Street Journal:
Wish you were more grounded? Here’s a solution: Buy a house.
For people in their 20s, owning real estate is a way to take on more responsibility, get a sense of stability in at least one area of life and maybe even build up some equity, too. But it involves a heavy commitment — to a mortgage, to a place, to holding a steady job — all of which can limit lifestyle and career choices. What about that six-month trip around the world, going back to school or joining the Peace Corps? Once a deed is signed, it may not be that easy to skip town on a month’s notice.
People in their 20s are more inclined to buy real estate now than they were 20 years ago, according to annual statistics from the U.S. Census bureau. In 2005, almost 26% of household heads under 25 years old owned their home, up from 17% in 1985. Homeownership rates for 25 to 29 year olds also increased over the past two decades, though not as sharply.
But don’t we have a propensity to change jobs and cities in our twenties? How about college and graduate school? Military deployments? In this phase, it may be hard to count on an income beyond the most immediate job, which could change. Is it worth taking the risk of committing to a mortgage payment budgeted around unpredictable conditions?
Phyllis Attebury, a real estate broker who lives in Carmel Valley, Calif., and works with clients on the San Francisco peninsula, says the market is slowing down a little and that buyers should be prepared to keep a house for at least five years to weather market downturns. “In the long haul, real estate has been a saving grace for many. But for a single person who’s here, there, and everywhere they should probably just think about renting for a couple of years,” she says.
Michael Esquivel, 23, a budget analyst who lives in New City, N.Y., is considering buying a house with two of his oldest friends. “But we’re young, and any of us could change jobs easily or move out and the other two would be stuck paying the mortgage, which would be horrible,” he says. On his own, Mr. Esquivel says he could only afford a shack and would prefer to live at his parent’s house and save money to buy a nice house later on.
I’m a renter myself, and I often wonder if owning a home that I could paint orange and cerulean and landscape with agave cacti and olive trees would instill such a serene sense of propriety that I’d be willing to give up being footloose and cosmopolitan. Or maybe I’d be better off renting indefinitely, and spending any extra money on dinners out and trips to Oaxaca and Paris.
It’s a tough call between empire and freedom.