July 12, 2024

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Girls, young women want to be homeowners by age 30, study finds. Here’s how they can achieve that goal

4 min read
Girls, young women want to be homeowners by age 30, study finds. Here's how they can achieve that goal

Girls and young women want to be homeowners by the time they’re 30 — a higher priority even than getting married or earning a lot of money.

About half, 52%, of young women ages 7 to 21 want to buy a house by 30, the most of any goal, according to Girlguiding’s Girls’ Attitudes Survey 2023. To compare, 48% want to be married by age 30, and 39% said it’s a goal to earn a lot of money. The organization polled 2,614 girls and young women in the U.K. between the ages of 7 and 21 earlier this year.

The report echoes findings from U.S. teens, 85% of whom think owning a home is part of “the good life,” according to the 2022 Junior Achievement and Fannie Mae Youth Homeownership survey.

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While teens dream of owning a home years from now, it’s a daunting market right now. Houses are more expensive than they were pre-pandemic and mortgage rates are higher. The median U.S. home sale price rose 3% year over year to $420,846 in August, the largest annual increase since October 2022, according to real estate brokerage firm Redfin.

Experts say prices are not likely to come down any time soon as the Federal Reserve may continue its interest rate hikes later in the year and homebuyers face a low supply.

On the other hand, young adults looking ahead to homeownership have time on their side.

“Hopefully by the time they are ready to buy, we will be in a different rate environment, there will be more inventory and a more balanced real estate market,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York.

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Three key components to buy your first home

Middle and high school students can start gaining financial literacy early, said certified financial planner Kamila Elliott, co-founder and CEO of Collective Wealth Partners in Atlanta. It will set them up for success in the housing market when their turn comes around.

To that point, there are three key components to being able to buy your first home, said Cohn.

1. Down payment

The down payment for a home is the biggest hurdle for most homebuyers. Although the standard is 20%, you can get by with much less. Shoppers come up with just 6% or 7% as a down payment on their first home more often, Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told CNBC.

If a high school student wants to buy a house in roughly 10 to 15 years, they can get started with a part-time job and set aside their money for that goal, Elliott explained.

A savings account is key for short-term goals, but if you have been putting aside money in retirement accounts, you may be able to use funds there for your down payment, too.

For instance, a Roth IRA is a retirement account with rules that benefit first-time homebuyers, said CFP Lazetta Rainey Braxton, co-founder and co-CEO of virtual firm 2050 Wealth Partners. Homebuyers can pull out of a Roth IRA account up to $10,000 for the down payment of their first home without penalty, said Braxton, who is a member of the CNBC Financial Advisor Council.

First-time homebuyers can also take advantage of down payment assistance programs some banks and states offer, Cohn said.

2. Credit score

When you apply for your mortgage, banks will look at your credit score, which is a measure of how well you manage debt. The score generally ranges between 300 and 850. The higher the score, the lower — and better — the interest rate you may qualify for on your loan.

For mortgages, banks like to see you are able to make consistent payments and are responsible with debt, said Cohn.

To maintain a high score, it’s important to manage the credit card responsibly and make on-time payments in full, said Elliott, who is also a member of the CNBC FA Council.

3. Income

Having a good income can also make you a more competitive buyer, added Cohn.

Lenders look at your debt-to-income ratio to figure out how much mortgage debt you can take on. Monthly payments for student loan debt, an auto loan or any other lines of credit can affect that calculation.

If you haven’t been working in a job for two years and your income is based on bonus or commissions, you may need a parent or family member to cosign the mortgage to show more stability in history of income, Cohn added.

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‘Understand what it is to be a homeowner’

If homeownership is a goal for early adulthood, it’s important to anticipate your responsibilities as a new homeowner, experts say. Outside of the mortgage, property taxes and insurance costs, utility and maintenance costs also tend to be higher in a house than an apartment.

“Understand what it is to be a homeowner and how things work,” Elliott said.

Keep in mind that your first home might not check all your boxes. It should be in an area you like and meets your needs.

“Your first home will not be your ‘forever home,'” Elliott said. “It may not [have dream amenities like] an open-air kitchen, the fireplace or a pool in the backyard.”