Home Buying (5/8/2025)

I finally saw a positive headline today - it might soon be a good time to buy a home. 🏡 The last 4-5 years have been very exciting, but also extraordinarily challenging for some buyers, in the real estate market. Property values skyrocketed during COVID and interest rates were on the rise shortly thereafter, making purchasing a home more expensive than it has ever been. Some believe the tide is turning. 🌊

I’m not going to speculate on what will happen in the real estate market in the next few years, but it’s certainly possible that supply and demand will begin to favor buyers again. Plus we’re realistically looking at a few rate cuts before the end of 2025, bringing mortgage rates down, and the cost of owning that next home, more affordable.  

What does this mean for you? Well, if you’re in your 30s and 40s…..be very careful. 

You may be earning more than you ever have before, which means a lender will be happy to offer you a massive loan. It’s likely going to be very tempting to take them up on it, but remember the amount they’re willing to lend is based on your current income (among other factors) and they are not concerned about your other goals. 

Whether you would be a first time homebuyer or you’ve done this many times before, it’s important to remember that a lender will want to offer you the maximum amount they feel you can realistically afford. The more you borrow, the more money they make. They don’t care if you save a dime for retirement, ever take a vacation, or need to live off of ramen noodles and peanut butter & jelly sandwiches for the next 30 years. They assume you will prioritize your mortgage payments, and the amount you are pre-approved for is likely beyond your budget if you desire flexibility or have other goals (like, maybe it would be nice to stop working before you’re 70?)  

This doesn’t mean you’re doomed to rent forever or stuck in your starter home, it just means be careful about how much you can comfortably afford. When John and I moved 3 years ago, we wound up buying a home with a purchase price that was half of what we had been approved for - and it’s a good thing we did because less than a year later I lost my job! 

You want to balance your homeownership dreams with all your other goals and what-ifs. When you’re in your 30’s and 40’s you’re more likely to want to slow down, change careers or prioritize your family over your job sometime before your mortgage has been paid off. You will want to ask yourself, what happens if your income changes? 

💼 You lose your job

🌴 You burn out and want to take a sabbatical

🚀 You decide to start your own business

🧑‍🍼 You want to go part-time while raising kids

😔 Injury, dealth, or divorce brings your dual-income household into a single-income household

Will the mortgage still feel manageable? Or will it feel like a burden? 

I’ll plan to dedicate a future edition of this newsletter to tips on home affordability sometime in the next month or two. Until then, remember that buying a home is about more than what you can afford today. It’s about building the life you want tomorrow.

Wishing you good financial health.