Written by Patrick Woods
In 1981, the average first-time homebuyer was 29 years old. Today, that number has jumped to 38, marking a significant shift in homeownership trends. Many cite rising home prices, lifestyle choices, and the preference for spending on experiences—such as travel, dining, and entertainment—as reasons for delaying. But while the immediate gratification of experiences is enticing, postponing homeownership could have a detrimental impact on long-term financial security and wealth accumulation.
A 5-Year Perspective: Where Has the Best ROI Been?
Over the past five years, here’s how key financial indicators have performed:
- Inflation: Up 21.1%
- Wage Growth: Up 19.8%
- S&P 500: Up 77%
- Amazon Stock: Up 116%
- Home Prices: Up 57.4%
At first glance, the stock market appears to have outperformed real estate. However, these numbers don’t account for leverage, which is where real estate dramatically outpaces traditional investments. Unlike stocks, where returns are based solely on invested cash, real estate allows investors to control a much larger asset with a small upfront investment, magnifying returns significantly.
The Power of Leverage: How Homeowners Build Wealth Faster with Lower Risk
Let’s break it down with a real-world example:
- Five years ago, a homebuyer purchased a $500,000 home with a 20% down payment ($100,000) and borrowed $400,000.
- That home appreciated 57.4%, increasing its value to $787,000 today.
- After repaying the loan, the homeowner now has $387,000 in equity.
- That’s a 287% return on their initial $100,000 down payment—far exceeding any stock market return over the same period.
But what if they had opted for a lower down payment—such as an FHA loan at 3.5% ($17,500)?
With just a $17,500 down payment and $482,500 borrowed, their equity would still grow to $304,500 after loan repayment.
That’s an astonishing 1,640% return on their $17,500 investment—a return unmatched by any stock investment, even Amazon’s 116% growth.
Real Estate: Lower Risk, Greater Stability
Beyond its superior cash-on-cash return, real estate provides far lower risk than stocks.
✅ Less Volatility – The stock market experiences dramatic swings in days or weeks, while real estate typically appreciates steadily over time.
✅ Tangible Asset – A home has intrinsic value—it can be lived in, rented out, or sold, unlike stocks, which have no physical backing.
✅ Market Protection – A stock crash can wipe out an investor’s portfolio overnight. But with real estate, as long as the mortgage is paid, homeowners retain ownership and future appreciation potential.
✅ Forced Savings – Each mortgage payment builds equity, whereas rent payments build wealth for the landlord, not the tenant.
The Cost of Waiting: Lost Wealth & Increased Barriers
Someone who waited to buy five years ago now faces:
🔺 Higher home prices – They now must purchase at $787,000, not $500,000.
🔺 Lost appreciation – They missed out on $287,000 in wealth growth.
🔺 Higher down payment requirements – 20% down is now $157,400, not $100,000.
🔺 Higher mortgage payments – As home values rise, so do monthly costs.
🔺 Lost leverage opportunity – Instead of 287% or 1,640% returns, they gained nothing.
Meanwhile, renters continue to pay someone else’s mortgage, with zero return on their monthly expenses.
The Tradeoff: Experiences Now vs. Freedom for a Lifetime
Many argue that delaying homeownership allows for more experiences now—but this decision could be jeopardizing the ability to fund a lifetime of experiences later.
Homeownership isn’t just about having a place to live—it’s a wealth-building tool that creates long-term financial freedom. The equity and appreciation from buying earlier can fund travel, flexibility, and financial security down the road.
If financial freedom is the goal, real estate is the vehicle that makes it possible. Owning a home doesn’t mean sacrificing experiences—it means securing the ability to have more of them, for longer, with less financial stress.
The Bottom Line: The Best Time to Buy is Now
In five years, the question won’t be “Should I buy?”—it will be “Why didn’t I buy sooner?”
