How many of you are kept up at night wondering whether now is the right time to buy a house? Yes, I know. I hear this question a lot so you are not alone. The answer is there is no right time to buy a house. Just like there is no right time to get married, get a dog or have a baby. The right time is when it is right for you!
Today LinkedIn News published an article saying that it took slightly longer than earlier generations, but millennials have finally turned a corner on housing. A slight majority (51.5%) owned homes in 2022 instead of renting, based on U.S. Census data. Millennials hit the milestone at the average age of 34, while Gen Xers were 32 on average and boomers were 33. For millennials who haven’t made the leap to homeownership yet, most are pessimistic they’ll ever be able to afford a house, based on a Harris Poll survey. It shows 69% believe they’re priced out, and 56% consider that dream dead.
Some decisions have been put on hold as the tax deduction for home ownership is not what it used to be. Your mortgage interest is deductible but your Real Estate Taxes get lumped in with State taxes and are capped at $10,000 per year. This has limited many buyers ability to deduct property taxes which in certain cities across the country is very very expensive. Also with the increased in the standard deduction, some people don’t even deduct their mortgage anymore. If this seems like a foreign language to you, thats OK, reach out to me or your tax advisor and ask us to explain again. It is critical that you understand these principles before you buy a house and assume you are making a smart tax choice.
There are many other reasons to buy a house outside of the tax deduction piece. Make sure that you consult with your financial advisor and your tax advisor so that you have a clear picture for the best use of your dollars based on who you are and what you want for your life. This is not a one size fits all decision.