Use These 5 Home Buying Rules To Navigate The 2024 Real Estate Market

While the housing market has gone from bad to terrible for many aspiring home buyers, 2024 may be the year you can reset your real estate priorities. Achieving financial success and becoming a debt-free millionaire in your 30s might sound like a lofty goal, but it became attainable for me with strategic real estate planning.

My husband and I adopted key financial practices that not only helped us accomplish this feat but also positioned us for a secure future in early retirement. Here are the 5 home-buying rules that can help you navigate the real estate market in 2024.

Wait Patiently While Saving A 20% Down Payment

While it may be tempting to opt for a minimal down payment, consider aiming for a 20% down payment even if it delays your home-buying timeline. Making the choice to wait until 2025 or later can pay off in the long run with:

• lower monthly payments;
• lower interest rates;
• faster equity build-up; and
• increased loan approval likelihood.

This commitment also promotes disciplined financial habits and long-term stability by helping you build the habit of saving up for bigger goals over short-term satisfaction. It might be challenging, especially when juggling other financial responsibilities, but it positions you as a more secure homeowner in the long run.

Set A Conservative Home Purchase Budget

In the volatile real estate market of 2024, it's crucial not to stretch your budget too thin. Rather than going for the maximum amount your bank approves, consider starting your purchasing budget at half of that figure.

For dual income couples, it’s important to consider what will happen to your home affordability if one of you were to lose your source of income. With 2024 trending in higher layoffs than previous years, job losses are s a real possibility that people might overlook when buying a home.

This approach may sound extreme and will likely require you to downsize your square footage or compromise on certain amenities. But this approach allowed us to maintain financial independence goals. We consistently bought homes below our approved limit, providing us with financial flexibility when we needed it most.

When the Covid-19 pandemic hit, when my husband switched jobs and when I decided to leave corporate America for entrepreneurship, we were still easily able to afford our mortgage payments thanks to setting a conservative budget.

Plan For Long-Term Residency

In an era marked by economic uncertainties, it's prudent to plan on staying in your home for at least five years. I meet many young couples and single professionals who are rushing to buy a home to look and feel like they are grownups. In actuality, they are unsure of whether they can or will stay in that home for more than a few years.

This minimizes the risk of financial loss due to market fluctuations or having to sell before building substantial equity. Assess your future plans and job stability before committing to a mortgage. If you feel there’s a high chance you’ll want to or need to move in less than five years, consider holding off on your home purchase.

Avoid The 30-Year Mortgage Interest Trap

Opting for a shorter mortgage term can save you substantial amounts in interest payments. In 2024, with potentially lower interest rates, financing your home with a 10- or 15-year mortgage could be a wise choice. It will certainly entail higher monthly payments than if you were to buy with a 30-year mortgage. But the overall savings and quicker homeownership payoff can significantly impact your financial freedom.

Consider Your Lifestyle Goals

Homeownership is not the only path to financial success. In 2024, as societal norms continue to evolve, prioritize your personal and lifestyle goals. Reflect on whether homeownership aligns with your aspirations, or if renting provides more freedom for pursuing entrepreneurial ventures, global travel, and early retirement.

In our own experience, my husband and I discovered that homeownership did not align with our long-term goals. Despite societal expectations, we sold our paid-off home in 2022 and returned to renting. This decision allowed us to redirect our resources toward building a business, exploring global opportunities, and embracing an early retirement lifestyle.

Before diving into the real estate market in 2024, carefully evaluate if homeownership suits your financial and lifestyle objectives. Remember, true success may not be found in a mortgage but in living life on your own terms, free from the constraints of loan obligations.