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- The assumptions I made about how my home would affect my finances were challenged when the pandemic started.
- Since the value of a home isn’t guaranteed to go up, it’s important to build wealth in other ways.
- Buying a home comes with long-term costs, but it’s also a chance to plan for long-term goals.
In 2019, I bought a condo using the income from my full-time job in tech. At the time, I was thankful to have a soft place to land that I could come home to every night, build my life, and be the truest version of myself. I was pretty young at the time and had no idea that COVID-19, remote and hybrid work, and more were right around the corner.
I had the chance to refinance in 2020 when interest rates were historically low, which has likely saved me thousands of dollars. I’m grateful I had that chance now that we’re seeing soaring interest rates. However, buying a condo didn’t come without its tradeoffs. Here are five big lessons that my experience taught me.
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1. Property isn’t guaranteed to go up in value
In the past, buying property was viewed as a way to build wealth and a cornerstone of the American dream. Early in the pandemic, property values in my area declined, because people were moving out of my neighborhood into places with more space. This taught me that a condo isn’t a guaranteed appreciating asset.
2. I need to have a solid emergency fund
Amid COVID-19, many people faced lay-offs and volatility in their lives, and it was an important reminder that I needed to be sure I could pay my mortgage on my own. COVID-19 taught me that an emergency fund isn’t nice to have — it’s a necessity.
I initially saved my emergency fund through a combination of three campus jobs in college, scholarships, research grants, and internships. Eventually, I built this up with my corporate salary so I could cover three to six months worth of expenses, including my mortgage, if I suddenly lost my job.
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3. Buying property doesn’t replace building wealth in other ways
In addition to paying down my mortgage, it was equally important to keep maxing out my 401(k) so I could earn the entire company match I was eligible for. I also continued to contribute the max amount to my Roth IRA shortly after purchasing my condo. This way, I could set myself up for retirement since I didn’t want to rely on my property as a way to build revenue.
4. Homeownership comes with lots of long-term costs
I chose an apartment over a house so I could build equity in a place where I wouldn’t have to tackle big building maintenance projects — like repairing the roof on my own. I knew I could handle day-to-day things like changing light bulbs and fixing home appliances with the help of my fiancée’s parents.
On the flip side, condos and townhouses can be subject to high homeowner association dues that can be further heightened for special assessment projects that cover building maintenance, which has led to significantly higher HOA costs each month that I’ll never get back.
5. I need to know my long-term goals for my home
As I was considering homeownership, I also needed to assess what I wanted out of a property, especially if it could become my future home.
It’s equally important to know what you don’t want. As it stands, I wouldn’t be able to rent out the place because my building has a rental cap. This is something I wish I had asked my realtor and the previous homeowner, which is why I would encourage anyone to make a list of non-negotiables for their dream home by asking what they want out of their home.
For example, do you want to have a space you can grow into with a future partner or growing family? Do you want to be able to run a business from home? Do you care about designated parking, public transit, or proximity to your workplace or family? All of these questions can inform which kind of space is right for you, especially as you think about living in your home long-term.
