Smart About Money: “Should young adults stretch to buy a home?”

Nick Maffeo

That eternally-debatable question was the focus of a front-page “Yes or No” feature article in The Wall Street Journal’s Wealth Management section earlier this year. “Interest rates are still low,” the Journal wrote. “Then again, it’s a sellers’ market.”

While their “Yes or No” experts obviously took different sides, both seemed to look at stretching to buy a house as if the variables affected all potential buyers equally. That may be true with interest rates but not with the cost of housing.

Which way are home prices going? That certainly matters and there are different ways to come up with a useful answer.

For one, while home prices are up nationwide, there are areas that are red-hot, including Metro Boston.

Some of that is people leaving cities and buying houses because of COVID. But the Metro Boston housing market has been super-competitive for years.

A “starter home” in Metro Boston is likely going to cost more than one in other parts of Massachusetts or in other parts of New England, and certainly more than in other areas of the country.

It’s probably going to be more of a stretch for a young adult to buy a home here. But – since housing in Metro Boston has a track record of being a very solid investment – it has always been more of a stretch. Location matters.

Right now, used cars and new cars are in short supply because of various factors, including that people moving out of cities are buying homes and needing cars. Car prices are way up and some experts are advising anyone who doesn’t absolutely need a car in the next year or so to wait until supply improves and prices stabilize. Timing matters.

Is the COVID effect going to lead to permanently higher housing prices nationwide? Maybe. And in the already mostly built-up Metro Boston area, that could be especially true. So while a car buyer might do better waiting to buy a new vehicle, it’s possible that – with interest rates still low and prices in this area conceivably at stable new highs – stretching now to buy a house in the Metro Boston area could be a very wise decision.

But only if the young adult needs a house and wants a house and the stretch won’t be a serious burden.

The reality is that everyone buying their first home feels like it’s a stretch. Ask an older relative, neighbor or friend. No matter what they paid for their first home, most say that it felt like all the money in the world at the time.

With the benefit of hindsight, it’s probably fair to say that the vast majority of homeowners see stretching to own that significant asset as one of their best decisions and one of the best investments of their lives.

Buying a home is the definition of a serious commitment. It’s not right for everyone and it’s fine if it’s not right for you.

The best advice for a young person thinking about buying a home? Find a lender you can work with closely starting very early in the process – even while you’re still working on saving a downpayment. Ideally, that’s a lender who has your best interests at heart, someone you trust who will give you good advice and make sure you’re not stretching too much.

The only goal: To be as sure as possible that stretching to buy a home has the best chance of being a good investment for you.

Nick Maffeo is the President & CEO of Canton Co-operative Bank – right next to the Post Office in Canton. Have a question? Email to

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