MONEY Kids and Money

The Surprising Thing Gen Z Wants to Do With Its Money

Teen in front of home
Getty Images

More than half of teens would give up social media for a year and do double the homework if it guaranteed they’d be able to buy a house when they're older.

During the Great Recession, home ownership took a beating as the ideal for the American dream. The median home nationally lost a quarter of its value, prompting adults of all ages to adopt other elusive goals—like retiring on time for boomers or working on their own terms for millennials.

Just 65% of Americans own their home, down from 69% pre-bust. And four out of five Americans are rethinking the reasons they’d want to buy a house in the first place. But Generation Z—also known as post-millennials, born after the 1990s Internet bubble— seems to prize home ownership like no generation since their great-grandparents.

An astounding 97% of post-millennials believe they will one day own a home; 82% say it is the most important part of the American dream, according to a survey of teens age 13 to 17 by Better Homes and Gardens Real Estate. More than half would give up social media for a year and do double the homework if it guaranteed they’d be able to buy a house.

This yearning stands in starkest contrast to the aspirations of millennials, older cousins who pretty much created the sharing economy and in large numbers prefer to rent. The housing bust and foreclosure epidemic scarred millennials, probably for life, as some watched parents and neighbors lose everything. In a key part of this generation—heads of households age 25 to 34—renters increased by more than 1 million in the years following the crisis, while the number who own a home fell by 1.4 million.

Post-millennials saw the carnage, too, though at a tender age that left them more confused than traumatized. Where millennials hardened and vowed never to repeat the errors of their parents, post-millennials sought the comfort of family and togetherness, says Sherry Chris, CEO of Better Homes and Gardens. “Many of these Gen Z teens were 7 to 11 years old when the recession hit,” Chris said. “At that age, children equate home with stability.”

The innate quest for stability leads them to prize a family home above things like going to college, getting married, having children, or owning a business, according to the survey. And the dream appears firmly grounded in reality. Chris observed that today’s teens have more information than any previous generation at their age and show early signs of financial awareness. Asked for an estimate of what they might spend on a house, the 97% who aspire to be owners gave an average response of $274,323—strikingly close to the median home value of $273,500.

Half say they know more about money than their parents did at their age. Two-thirds attribute their knowledge of money matters to discussions in the home, and two in five credit discussions in school. Three in five teens have already begun saving, the survey found. Post-millennials, on average, aim to own a home by age 28—three years earlier than the median age of first-time homebuyers reported by the National Association of Realtors.

These are encouraging findings. A home remains most Americans’ single largest asset, and while the housing bust will have lingering effects, home prices nationally tend to rise every year—and have been trending up again the past few years. Not all of the news is good: Only 17% of post-millennials believe stocks are the best long-term investment; half prefer a simple savings account, TD Ameritrade found in a survey that defines the generation as slightly older (up to age 24).

But the TD survey also found that post-millennials have half the post-college credit card debt of millennials. And the Better Homes survey suggests that our youngest generation is at last learning more about money at an early age, which is the goal of a broad public-private financial education movement. A generation of financially adept youth who begin to save and gather assets that will grow for four or five decades is the surest way to avoid another meltdown and solve the retirement savings crisis.

Why Gen X Feels Lousy About the Recession and Retirement
Our Retirement Savings Crisis—and the Easy Solution

MONEY Ask the Expert

The Wrong Reason to Replace Drafty Old Windows (and the Right One)

Robert A. Di Ieso, Jr.

Q: Our 90-year-old house has its original drafty windows. Should we replace them to cut our sky-high cooling and heating costs?

A: In a word, no. The energy savings from new windows don’t come close to justifying their cost. True, new high-efficiency (double paned, argon-gas filled, low-emissivity film coated) windows might offer twice the insulation value as the old single-pane units in your house, meaning they’d cut your energy loss through the windows by as much as 50%. But only about 30% of your house’s heating and air conditioning disappears out the windows, says Paul Scheckel, a home energy efficiency consultant in Vermont and author of The Homeowner’s Energy Handbook. So at best you’d really only save about 15% (calculated by taking 50% of 30%).

Thus even if you pay a whopping $2,000 a year in heating and cooling costs, your savings would only be $300. According to Remodeling magazine’s 2014 Cost vs. Value report, the average cost for replacement windows is about $11,000, meaning it’d take 37 years to recoup your investment.

This doesn’t mean it’s a bad idea to replace your windows. The study also showed that homeowners get back nearly 80% of window replacement costs when they eventually sell. Plus, new units tilt in for easy cleaning, and they open and shut with ease—no need to prop them open with a stick. You get to eliminate those ugly aluminum storm windows and can even choose units that never need exterior painting.

Just be sure to choose windows that match your home. If your 90-year-old building is an architectural charmer, you’ll want to mimic the old units’ “divided light” patterns (the small panes within the windows), and use high-quality wood windows that fit the historic look of the building. Otherwise, using an economy-grade window could actually detract from your resale value instead of increasing it.

MONEY deals

5 Reasons September Is the Best Month to Go Shopping

Red lawn mower and sprinkler on lawn

September is an in-between month for consumers. It's not really a peak period to buy anything—which is why it's absolutely a peak month for savvy shoppers looking for deals on everything from lawn mowers to houses.

You may be still paying off your summer vacation. You may feel the need to start socking away money to cover your winter holiday shopping budget. There may be nothing that your household really needs to buy right now. Even so, there’s a good argument to be made that you can and should be shopping in September—and that you can feel smart, thrifty, and virtuous about it. Here are five reasons why.

1. Summer is over. The need for summery goods such as lawn mowers, barbecue grills, patio furniture, bicycles, bathing suits, and anything related to the beach is rapidly disappearing. So, naturally, stores want all typical summer purchases off their shelves and out of their aisles, pronto. Look for them at increasingly discounted prices until they’re gone. For instance, patio furniture should be listed at clearance prices of 50% to 75% off, according to dealnews. In addition to markdowns on summer items, Consumer Reports noted, shoppers can also expect stores to be discounting snow blowers for a similar reason—they’re just not top of mind for consumers, so some extra incentive is needed to make customers bite.

2. Kids are back in school. Retailers started pushing back-to-school sales in June, before most kids even started their summer vacation, and August is generally considered peak season for back-to-school purchases. But this year, at least, shoppers seem to have wised up to the simple fact that prices drop for those who wait. After a fairly lackluster summer season, stores were promoting early Labor Day deals to pump up apparel sales in particular. Even that wasn’t enough to drive many shoppers into stores.

“Consumers, not stores, are driving the trends these days, which means September will be the busiest back-to-school month this year, contrary to what stores and retailers may think,” the NPD Group’s Marshal Cohen noted recently. Here’s how Cohen explained why consumers have changed in their approach to back-to-school shopping:

Parents are prioritizing by purchasing supplies first, then some basic wardrobe necessities, and lastly following up with fashion, putting summer aside and purchasing clothing and apparel for colder rather than warmer weather. The reason consumers are delaying this significant aspect of their back-to-school shopping is twofold: they want to find out what’s “cool in school” before making their purchases and, looking at the broader trend, consumers don’t want to buy early anymore; consumers today want to buy in season.

Seasonality is just part of it; parents are also hip to the fact that prices are likely to drop on many back-to-school items and fashions once retailers consider peak back-to-school season to be over.

3. New gadgets are coming. Which means that older models will be marked down soon, if they haven’t been already. Consumer Reports suggests September as a great month for buying all sorts of small electronics (MP3 players, Blu-ray players, etc.), and dealnews points out that iPhones currently on the market are bound to be discounted when Apple introduces the new model, which should take place next week.

4. The winter holidays are looming. The overarching reason that stores are extra aggressive with markdowns in September is that they are eager to gear up for the Thanksgiving–Christmas shopping period. Sure, summer is an important season for retailers, but it pales in comparison to the end of the year. Some outlets routinely ring up more than half the year’s sales during the winter shopping season. So they understandably want to be fully prepared to make the most of it. To do so, it helps to start with a clean slate, with little or nothing in stores left over from the summer. Hence, major deals to clear out stores.

5. House hunting slows to a crawl. A new Trulia report explains that September marks the beginning of a sharp slowdown in people searching for homes to buy in most markets. For the most part, the arrival of Labor Day is bad news for owners who have listed their homes but have yet to close a deal with a buyer. On the other hand, fewer buyers in the market means an advantage for those who remain. Sellers who would have laughed off a lowball bid in, say, early June will be much more likely to consider such an offer come September.

MONEY Home furnishings

How to Host a Money-Making Yard Sale

Rob Gage—Getty Images Tip: add a clear directional arrow to your sign.

Follow these strategies to rake in the big bucks when you put your old stuff out to sell.

While the art of a yard sale may seem pretty straightforward, simple alterations in timing, pricing, and display can make the difference between a successful sale and a full-on flop. For starters, consider inviting friends and neighbors to join in and making it a group effort, since multihome sales typically attract a bigger crowd. Once the team is assembled, follow these dos and don’ts from Ava Seavy of for selling your unwanted wares the old-fashioned way. You may just strike gold.

1. Title your event wisely. “Estate Sale” or “Moving Sale” implies that you’re liquidating a house’s contents and can earn you more than the simple “Garage Sale.”

2. Drum up attention. Place ads in local newspapers, online, or on public bulletin boards. Reserve signs for the day of the event, and only include the sale’s date, time, and directional arrows to its location. Make sure your signs are readable from a distance that will give a driver time to slow down and turn. That means bold, thick, black letters on large, brightly colored posterboard, readable from a few hundred feet down the road.

3. Offer freebies. While you shouldn’t hand out items without a catch, encourage people to spend more with buy-one-get-one deals, which let you truthfully advertise free goods. Be sure to conceal items you don’t plan to sell, to avoid dashing buyers’ hopes.

4. Don’t forget Fridays and Saturdays. Many experts maintain that Sunday is the best day for a sale, since people tend to reserve Saturdays for running errands. But, Seavey advises, “Start your sale earlier in the week than you think. Believe it or not, the best day of the week to hold a sale is Friday, as this is when most dealers and retired people will come.”

See the full list of 10 tips, plus photos, at This Old House.

9 Ways to Score Big at a Yard Sale
Inside the ‘Pay What You Want’ Marketplace

MONEY Smart Shopping

9 Ways to Score Big at a Yard Sale

Binoculars at a yard sale
Kevin Van Aelst

Use these strategies to help you find the treasures among the castoffs.

Between summer renters unloading stuff, parents clearing out space for back-to-school gear, and teens leaving behind their childhood rooms for college dorms, Labor Day weekend can be a bonanza for yard-sale shoppers. To get the best deals, though, you have to know what to look for. Here are 9 ways to shop a yard sale like a pro.

1. Know your sizes. You don’t want to discover after you get it home that your terrific new end table is three inches too wide for the spot you had in mind. Assess your spaces beforehand and carry a small tape measure in your bag to use while browsing.

2. Think frames, not art. The chances you’ll spot an original Whistler in your neighbor’s yard? Not so good. Frames, on the other hand, can often be worth more than sellers think. “I have found some that were 150 years old selling for chump change,” says artist, designer, and garage sale enthusiast Pablo Solomon. Look for intricate frames made from solid material. For more on what makes frames, art, and other antiques valuable, see the guides at

3. Scout out old china. Yard sales are great for nabbing just-out-of-the-box kitchenware. But vintage bowls and cups may be a better deal—and better quality—than newer items. If you’re interested in a lot of pieces, ask for a bulk discount; sellers are often willing to cut a deal to clear out a bunch of wares at once.

4. For resale, try retro. Yard-hopping for profit? Many traditional antiques are selling for half what they used to because downsizing baby boomers are flooding the market and younger buyers have a different aesthetic, says Patrick van der Vorst, a Sotheby’s veteran and co-founder of Today’s hot items are appliances, functional objects, and novelties—such as movie posters or advertisements—from the 1950s, ’60s, and ’70s. Use your smartphone to check how much similar items have recently sold for on eBay before you negotiate.

5. Get goods appraised. Think you’ve found a garage sale gem? will give you a virtual appraisal for $10. Just submit a photo, and within 48 hours you’ll have an estimate as well as details about the item’s provenance and insight about why something is or isn’t valuable. That’s knowledge you can use to score even bigger on your next scavenger hunt.

6. Test the electronics. Those new-looking portable iPod speakers are a great deal—or are they? Pack an assortment of batteries to test electronic goods, along with a high-powered flashlight or black light to check for cracks or chips on housewares or furniture that may not be visible to the naked eye.

7. Look carefully at costume jewelry. Sellers often think that old costume jewelry made with fake stones and plated with silver or gold isn’t worth anything. Yet “vintage costume jewelry can sell for big bucks,” says Reyne Hirsch, an expert in 20th-century decorative arts and former appraiser for Antiques Roadshow. Look for sturdy settings and clasps; avoid pieces that have chipped or worn enamel.

8. Go for heavy items. Gardening tools, kids’ bikes, fitness equipment, and furniture all may be cheaper at a yard sale than online, since many sellers don’t want to go through the trouble or expense of shipping awkward or heavy pieces. To snag the best price on something mentioned in a listing, try calling the seller the day before; aficionados often circle the block hours before the official sale starts.

9. Know when to steer clear. Mattresses, upholstered furniture—forget ’em. The risk of bedbugs is too high. Also be careful with baby gear such as car seats and cribs, since safety standards often change. Check the latest safety info on baby items at the U.S. Consumer Product Safety Commission’s website,

Adapted from “How to Spot a Yard Sale Deal” in the July 2012 issue of MONEY magazine.

How to Host a Money-Making Yard Sale
Inside the ‘Pay What You Want’ Marketplace

MONEY Home furnishings

Why Ikea Items Look So Good… In the Catalog

The firm has embraced a cutting-edge technology to create images of scenes that don't actually exist.

Ever wonder why your Ikea chair or sofa doesn’t look quite the same as the one in the catalog? Turns out that many of the glossy images you’ve been drooling over aren’t actually photos of a physical chair, sofa, or any other object placed in front of a camera. Instead, the Swedish furniture firm uses 3D rendering technology to create digital models of their products, which can then be dropped into any room or scene the artists and photographers create. That way, they can easily tweak anything from the angle of the chair to the sunlight reflecting through the window to the placement of the fruit bowl on the table.

According to a post from the CG Society, an organization for digital artists, Ikea now uses the technology to create 75% of the product images in its catalog. The firm told CG Society that using 3D rendering is less expensive and logistically easier than trying to ship items from all over the world to be photographed. It also allows for more flexibility. For example, if an item is changed, it can simply be digitally tweaked rather than reshot.

Of course, this technology also allows the company to get the absolute “perfect” shot. “With a lot of those images from Ikea I could tell immediately they were done with 3D,” says Shamus Clisset, a New York City artist who generates his creations using similar technology, and has a show opening next week at Postmasters Gallery in Manhattan’s Tribeca neighborhood. “It is just a little too perfect about everything. The hard thing to get right in 3D is the imperfection.”

For instance, when you build an Ikea chair yourself, it may have a little nick or scratch—imperfections you’re unlikely to see in a digitally-rendered image, unless they’re added. Similarly, if you screw together a table, one of the legs may not stand completely straight, causing the table to tilt ever so slightly. The computer, on the other hand, can generate a perfectly geometric table.

To be fair, companies have always used tricks to create the best possible images of their products. “It isn’t that different from how product shoots were done in the past,” Clisset says. “When you see a bowl of cereal on the front of a box, it isn’t milk in the photo. You use glue instead because you have more control over it. Now it’s just done digitally.”

Clisset explains that the technology has come a long way in the last ten years, to the point where 3D artists can create images that are indistinguishable from an actual photo. “I have been doing the 3D stuff for almost ten years, and when I first started out people couldn’t even grasp the concept,” he says. “But today people are getting more familiar with it.”

Now an artist—or furniture company—can choose between, say, many different types and colors of wood, and simply digitally render them onto a model product, such as a floor or table.

You’re also likely to see this technology in auto ads, says Clisset. Want the car in the mountains? Sure. Desert? No problem. City? Just decide where to place the people.

Here is a thread that includes before and after shots from television and movies produced with the help of these techniques.

The challenge now for consumers will be to be able to discern what is real, and what is digitally created. That is, if they even care.

Click here for the original CGSociety post, which includes photos.

MONEY home improvement

5 Common Remodeling Projects That Don’t Pay Off

swimming pool
Blend Images/Trinette Reed—Getty Images

Not all home renovations will attract a higher price from future buyers.

The goal for many owners when they make home upgrades is to increase the functionality, beauty and value of the space. Of course many upgrades, such as updating the kitchen, check all three boxes. Yet sometimes homeowners want to add features to the home that provide enjoyment and whimsy, and simply assume the updates will add perceived value when they eventually sell. Unfortunately, that isn’t always the case. Some renovations might be seen as unattractive or too expensive to upkeep – thus becoming a project that detracts, not adds, to the home. So before you start calling contractors and scheduling appointments, make sure you understand if the project will add value to the home, or if you’ll be paying purely to enjoy it.

Here are five projects that may not increase the value of your house.

1. Adding a swimming pool

Swimming pools are nice for hot summer days and occasional dips, but you may be surprised to learn that a pool often doesn’t add much value to your home. Here’s why: they are a high-maintenance, costly feature that not all buyers appreciate. You have to pay to maintain and heat it- plus it could be a disaster if a family has small children. Also considering how much they cost- anywhere from $10,000 to $100,000- plus annual maintenance, the tab runs high for a specialized activity. That said, in certain parts of the country a swimming pool is expected, such as Arizona and Florida. Thus before installing one, understand its value in your local housing market, and keep in mind that the next buyer may not appreciate it as much as you do.

2. High-end upgrades

Pricey stoves, refrigerators and other appliances are attractive, but if a kitchen is fancier than most others in the neighborhood you’re not doing your home any favors. Why? The prospective buyers attracted to that neighborhood may not be willing- or able- to fork over for the upgrades. They also may not consider them necessary. Thus when you do eventually sell, the value of your home will be held down by the surrounding properties. If you are unsure about how much to spend on a particular project, read through our budget articles and return on investment articles.

3. Too much carpet

Carpet may feel more comfortable than hardwood, tile or other solid surface flooring, but before you start using it to cover the latter, consider the value. Carpet can easily look dingy, traps allergens, and doesn’t have the longevity of wood floors. Typically prospective homebuyers like to see solid flooring – in fact, many home buyers would love to know if any valuable flooring can be salvaged underneath carpeting. Thus if you already have a solid flooring surface, invest your money into refinishing the current hardwood floors and tile, instead of covering it.

4. Rooms that are too specific

Buyers browsing mansions may expect to see a bowling alley, wine room, yoga studio or craft room. For everyone else living in a typical single-family home, though, you’ll want your rooms to have a clear purpose where a wide audience can envision living. Thus if you have a recreation or another bonus room, it’s a good idea to make sure it can serve a common purpose (such as watching television) and isn’t so specific that a prospective homebuyer wouldn’t know what to do with it. For example, if you are using your extra bedroom as an art or photography studio, it doesn’t make sense to renovate it to better serve its current function. The next buyer likely will want it for a guest room. Got questions? Home stagers are experts at helping homeowners see their home through the eyes of a potential homebuyer.

5. High maintenance landscapes

Everyone loves a beautiful garden, but not everyone wants to maintain a landscape that requires a large amount of money and time. Spending every weekend on yard upkeep, or paying someone to do it, just doesn’t sound attractive to the average home owner. The same may be said for complex water features, since some buyers may be concerned about both the conservation and cost of water. Thus it’s a good idea to have a healthy and well manicured yard that has curb appeal, but don’t go so far as to install such extensive landscaping that all prospective buyers see is a huge headache.



More from Porch:

Preparing an Interior Design Budget

Budgeting for your Front Door Remodel



Anne Reagan is the editor-in-chief of home improvement website

MONEY Ask the Expert

The Best DIY Home Projects

Robert A. Di Ieso, Jr.

Q: I’m pretty handy, and I enjoyed building sweat equity in our first home, but now my time is very limited. What’s the best place to focus my DIY efforts?

A: That all depends on what “pretty handy” means to you. Does it mean you have a full, Norm-Abram quality woodwork shop in your basement? Or just that you know how to oil the door hinges when they start squeaking, reboot the wireless router when it lags, and jiggle the toilet handle to stop the toilet from running?

Chances are, your skill set is somewhere in the middle. We’re betting you have good construction instincts, a bit of experience—and some tolerance for a few minor mistakes in the results if it means saving money.

So keep it simple: Don’t tackle a task you haven’t done several times before, unless it’s an out-of-the-way spot where it won’t get much visibility, says Pittsburgh DIY consultant Michael R. Wetmiller. Don’t reshingle the front of the house until you’ve reshingled the garage. Don’t tile the foyer floor until you’ve tiled the kids’ bathroom.

Also, stay away from any job that puts you—or your house—at risk. That means avoiding any ladder over about eight feet tall, electrical wiring, plumbing, and major demolition work.

And look for jobs where your limited schedule won’t become a major stress. “You don’t want to live without a kitchen while you’re spending only weekends and evenings remodeling it,” Wetmiller says. And you don’t want to battle bad weather or darkness when you happen to have time to invest in the job.

That’s why he suggests that DIYers renovate an out-of-the way interior space, where you can work any time of the day or night. “Finishing the basement is a perfect example,” he says. “You can do as much or as little of the work for which you have time and skills and contract out the rest.” No rush and no disruption of daily life if the project drags on for a while. Here’s what you might save by doing your own:

Drywall: $1,500 to $2,000

Flooring: $1,000

Painting: $500 to $800

Insulation: $200 to $500

Trimwork: $200 to $300

Got a question for Josh? We’d love to hear it. Please send submissions to Check back in with us on Wednesdays to read his answers.


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MONEY home prices

Slowing Price Gains Reveal Little Exuberance for Homes

Dimitri Vervitsiotis—Getty Images

Looking ahead, the rate of home price growth may slow even further, especially if mortgage rates increase.

While housing prices continue to rise, the rate of that growth nationally slowed in June, according to a leading gauge of the real estate market.

The S&P/Case-Shiller Home Price Indices showed that home prices throughout the country increased 6.2% since last year. Meanwhile, separate indexes that track 10 and 20 large U.S. cities showed gains of 8.1% during the same time period.

Though decent, those gains were a far cry from the double-digit growth in home prices late last year. Moreover, all three indexes showed deceleration from the prior month, and every city measured experienced lower year-over-year price growth.

“Home price gains continue to ease as they have since last fall,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators — starts, existing home sales and builders’ sentiment — are positive. Taken together, these point to a more normal housing sector.”

Blitzer also cautioned that an increase in interest rates, which Federal Reserve chair Janet Yellen hinted at last week, may mean further deceleration if they lead to higher mortgage rates.

“Bargain basement mortgage rates won’t continue forever,” he said. “Recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won’t send housing into a tailspin, but will further dampen price gains.”

To be sure, home prices are still going up across the board. All cities reported higher prices for the third consecutive month, and price growth in markets such as Dallas and Denver has continued unabated.

Nationally, average home prices in June are back to Spring, 2005 levels. But city composites are still roughly 17% down from their peak prices in June/July of 2006.

MONEY buying a home

Why Millennials Should Wait to Buy a Home

For all the benefits of home ownership, many drawbacks exist as well. Make sure the negatives won't outweigh the positives for you.

Buying your first home is an exciting time, given the dozens of financial and lifestyle benefits that come with owning the roof you sleep under. What’s more, interest rates are still low, hitting 4.3% for a 30-year fixed loan this month, making it a good time to borrow money. According to the latest Trulia survey, 68% of Millennials are in the market for a home priced at $200,000 or lower.

Purchasing a place isn’t necessarily the right move for everyone, though. Despite all of the positives of home ownership, there are some very compelling reasons not to rush into a mortgage right now. Here are seven.

You Lose Flexibility

Home ownership provides stability, but that may not always be a good thing when you are in your career-building years. If you are looking for a promotion, an advance, or job change, you may have to relocate to get to that next level. You need to have the ability to move on short notice, maybe even as fast as 30 to 60 days. Having to sell your home quickly could force you to offer it up at a bargain price, in addition to incurring thousands of dollars of closing costs. Sellers typically pay their realtors six percent of the selling price.

There’s No Room For Baby

Millennials are in the prime years for starting families. You may not have one now, but there’s a good chance that will change in the near future. While that cozy home or downtown condo may sound ideal now, you’ll likely feel different as a party of three. After all, pregnancies as well as the first few months of a newborn are stressful enough. Having to find a larger place to live, sell your house and pack your belongings with a due date looming- or a newborn- can be unbearably stressful and costly. It may even put you in the red.

Moving Within Five Years Will Cost You

If for any reason you think you may not be able to stay in your home for five to seven years, you should not buy. It will be cheaper to rent. The rule of thumb used to be seven years, but now that the housing market is stabilizing, that timeline has shifted slightly. With only moderate market appreciation, it will generally take five years for you to recoup the many thousands of buying, selling, and carrying costs. Keep in mind that in the first years of your mortgage, you won’t be building up too much equity. Banks charge a hefty portion of your interest upfront, with very little going to your principal in the first few years.

Small Down Payments Bring Added Risk

If you don’t have enough money saved for a traditional down payment, don’t buy a house right now. I am a big proponent of 20% down. That is not always feasible for most Millennials starting out, and it is lot of money to have saved up. But, unfortunately, it is the safest, most conservative approach to home ownership. If you can’t bank on Mom and Dad for a leg up on the down payment, then think about saving for a few more years.

You Carry Too Much Debt

You can’t overlook your student loans, car loans, and any other debt you have accumulated. Consider paying it down first, particularly credit card debt. Not only can a home purchase slow your debt reduction plan-likely costing you more in interest- banks will not be willing to approve you for a loan if your debt payments eat up a significant share of your income.

Your Job Security is Shaky

First, purchasing a home with today’s new qualified loan standards requires some consistent job history. When you’re in the early stages of your career, there may be jumps and gaps in your resume, which can make getting approved for a mortgage a challenge. What’s more, job situations can change overnight. Once you own a place, losing a job, suffering periods of unemployment, and living on a lower income are not as easily weathered. You may even need to accept a new job with a lower salary, but your housing costs will remain the same. You won’t be able to quickly downsize, and want to avoid needing to sell out of financial desperation.

You’ll End Up Cash Poor

Buying a home often leaves cash poor. After you come up with the down payment, the closing costs, and any renovation that you need to make prior to moving in, your bank account likely looks depleted. Having few dollars to your name is likely not the way you want to start living the ‘American Dream.’ Thus delay buying until you make sure you will have enough cash leftover to weather a job loss, an unexpected emergency, or even a health issue that could impact your earning power. You don’t want to end up house rich, cash poor and nothing to rely on in an emergency. Life happens.


More from Trulia:

Top 10 U.S. Metros with the Highest Private School Enrollment

8 Ways to Make Your Home Offer Stand Out

6 Signs a Home is “The One”


Michael Corbett is Trulia‘s real estate and lifestyle expert. He hosts NBC’s EXTRA’s Mansions and Millionaires and has authored three books on real estate, including Before You Buy!

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