Last year, while Whitney Buehler was in Croatia on her honeymoon, the back of her mind was home in Atlanta gearing up for a summer of house hunting.
Ms. Buehler, 25, and her husband, Joey, 27, didn’t like renting, and had discussed the idea of buying a home for two years before getting married.
Throughout the pandemic, they had put aside around $40,000 in savings and kept an eye on the chaotic housing market. With their wedding out of the way, they finally had the time and energy to dive into their search head-on. After touring 15 houses, the Buehlers placed three offers before one was accepted.
The property was a fixer-upper in the Ormewood Park neighborhood of Atlanta’s Eastside. It cost $389,000 and ticked all of their boxes. It was right off the BeltLine, a network of trails that Mr. Buehler uses to bike safely to work. It had a verdant yard filled with tulip poplars and three majestic oaks. It had two bathrooms. The couple moved in last August.
The Buehlers are part of an enviable cohort of young adults who manage to become homeowners before the age of 30. Reaching such a milestone can feel like a tall order these days. The typical age of a first-time home buyer is 36, according to a recent survey from the National Association of Realtors. When the survey was first taken in 1981, the median age for first-time buyers was 29. Home prices surged in the first two years of the Covid-19 pandemic, and in recent months fell only slightly from those peaks.
The cost of renting has skyrocketed in many cities, eroding the ability of tenants to save. Add other forces — like high student loan debt and wages that haven’t kept up with inflation — and it’s no surprise that young adults appear to be renting for longer and becoming homeowners later, if ever. But against these odds, many are still making it happen. Twenty-nine percent of adults between the ages of 18 and 29 owned their homes in 2021, the Federal Reserve found.
Good old-fashioned saving is generally not enough to afford a home in your 20s. That is especially true for young people just starting out in their careers. Those who do manage to buy before 30 often get help from family or have high-paying jobs. But some are finding other paths to homeownership by settling down in lower-cost-of-living areas or tapping into programs that help reduce down payment costs for qualifying buyers.
For Ms. Buehler, becoming a young homeowner was made possible in large part because of a $40,000 inheritance from her great-grandfather. It was earmarked for college tuition, but because she paid her way through school with scholarships and part-time work, most of that money went untouched.
The inheritance covered half of the down payment. Ms. Buehler and her husband split the rest, prorating their contributions according to income. Her husband is studying for a doctorate in biochemistry, cell and developmental biology, and Ms. Buehler is an engineer for the Environmental Protection Agency. Her salary alone covers their monthly mortgage payments and bills.
Wealth-Building Through Homeownership
For renters, housing costs can fluctuate wildly from year to year, especially in places where landlords can increase rent without limits. Homeowners often opt for fixed-rate mortgages, which effectively lock in their cost of housing for decades and can insulate theme from volatile economic cycles, said Jung Choi, a senior research associate at the Urban Institute, a think tank.
People who buy their first home before they’re 35 accumulate significantly more wealth by the age of 60 than those who do so afterward, a 2018 analysis by the institute found. “At an age near retirement, you actually have built your wealth for a longer period of time,” Ms. Choi said. The earlier you buy your home, the more time it has to appreciate in value, and the more time you have to pay down mortgage debt.
Homeownership as an engine for wealth-building is what Desiree Gaeta had in mind when she bought her first house at 27, in the summer of 2020. At the time, Ms. Gaeta, who was working as a nurse, gleaned what she could about the power of homeownership through her colleagues. Her parents hadn’t become homeowners until middle age, so she wondered if she could do so in her 20s.
A nurse who also worked as a real estate agent explained to Ms. Gaeta how to estimate what she could afford. For years, Ms. Gaeta had been putting money in a savings account and was surprised to learn that she had enough for a down payment on a house in Charlotte, N.C. As a first-time home buyer, she qualified for a Federal Housing Administration loan, a government-insured mortgage that required Ms. Gaeta to put only 3.5 percent down, based on her credit score.
She bought a newly built four-bedroom, two-and-a-half bathroom starter home for $290,000. The house is now valued at over $400,000, she said, thanks in part to a hot housing market.
Ms. Gaeta left her job as a nurse and is now a real estate broker who shares advice on TikTok to younger buyers.
“A lot of people want a dream home,” she said. “I see it as a steppingstone — a way to create generational wealth for my family.”
Home Buying as an Investment Opportunity
Brian Chu, 27, wasn’t planning to become a homeowner until a chance to invest came along. In 2020, he moved to Los Angeles to work as an administrative assistant at a private school for children with learning differences. The job initially included free housing, but after a year, Mr. Chu had to find his own place. His father made a generous suggestion: What if he bought his son a condominium so he could avoid paying high Los Angeles rents?
At first, Mr. Chu hesitated. His career was just getting started, and there was a possibility that he might have to relocate as his employer expanded. He wasn’t sure about buying property in a city he might not live in long-term. But he realized a condo could be turned into a source of rental income.
The father-son pair ended up buying a two-bedroom condo in the Sherman Oaks neighborhood for $600,000. Mr. Chu poured his savings into the purchase, covering around 5 percent of the cost; his father put up the rest. They then used delayed financing to get a mortgage, a process that allows buyers to get a loan on their new home after already paying for it. (The buyers can make cash offers — which are more attractive for sellers — and then get that money back to have on hand.) The condo’s mortgage payment is around $1,100 a month, and Mr. Chu is responsible for covering it.
The way Mr. Chu sees it, the past plays an enormous role in the lucky position he occupies in the present. His grandparents owned textile businesses in Hong Kong between the 1950s and 1970s, when the city underwent high economic growth. That success allowed them to help Mr. Chu’s parents emigrate to the United States, where they built successful careers of their own in the medicine and software fields.
“When it comes to cold, hard numbers, I think it is really helpful to be transparent,” Mr. Chu said. “I was able to do this because my parents helped me out a lot. And then they were able to do that because of their parents.”
Eventually Mr. Chu moved to Seattle, where his employer opened another school. He’s now simultaneously a renter and a landlord. The rent his tenants pay for the Sherman Oaks condo covers his mortgage and homeowner association fees, leaving him with around $1,500 in supplemental income a month, which helps him keep up with the high cost of living in Seattle.
A Pathway for Low-Income Households
While homeownership is a wealth-building tool, it’s not accessible to all Americans. Racial chasms in homeownership persist in large part because of the long-tail effects of racially exclusionary housing policies, like redlining and predatory lending. Black households on average have significantly less wealth than white ones, which translates into less money that families can pass down to support younger members in buying a home.
Ms. Gaeta, the real estate agent in North Carolina, paid for the initial down payment without any help from her family. “It’s not that they didn’t want to,” she said. “It’s that they couldn’t.”
Ms. Choi, from the Urban Institute, wants to see policies level the playing field to make it easier for renters to become homeowners. “Homeownership cannot be separated out from its investment side,” she said. “And as the investment side of the pie grows, that’s absolutely going to exacerbate inequality.”
In recent years, local governments and nonprofits have introduced a range of initiatives aimed at helping low-income residents buy their first home.
Two years ago, Akirah Pressley, then 29, accomplished her goal of becoming a homeowner. Born and raised in Philadelphia, Ms. Pressley moved around a lot as a child, frequently shuffled from one guardian to another. When she became a young mother, she dreamed about owning a house and giving her children the stability she never had.
She lived in rental homes for about a decade, receiving monthly assistance from the federal housing voucher program known as Section 8. Through the city’s housing authority, she got in touch with a financial adviser, who told her about various funds that could help set her up for homeownership.
One program, for example, offers grants of up to $10,000 for low-income first-time homebuyers, and another encourages people to save by providing a $2 match for every dollar saved up to $2,000. Eventually, with the help of these resources, Ms. Pressley saved $16,000 for a down payment.
In 2021, she bought a three-bedroom, one-bathroom house in the Lawncrest neighborhood of Northeast Philadelphia for $160,000. It’s a step up from her old rental in almost every way: A library, a supermarket, a park and a community center are all within walking distance.
“It was an overwhelming feeling,” Ms. Pressley said about the moment she signed the papers and became a homeowner. “It was also relief. It was excitement. It was heavy tears. It was amazement.” She considers that milestone “the greatest achievement in my life.”
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