By Ryan McLaughlin, CEO, Northern Virginia Association of Realtors® (NVAR) and Terry L.Clower, Ph.D., Director, Center for Regional Analysis, George Mason University

Homeownership as a milestone

As housing affordability challenges persist and demographic trends shift, understanding when to buy a home has become both a financial and psychological milestone for many Americans. Deciding when to enter the market requires balancing long-term financial readiness with life circumstances and market realities. Against this backdrop, a trusted Realtor® provides essential expertise and guidance, helping buyers navigate complex decisions with confidence. 

For most American households, homebuying represents their largest financial investment, whether it is a first home, a move up or a downsize. The timing of homebuying has become increasingly complex and the entry into homeownership is occurring later in life. In this article, the Northern Virginia Association of Realtors® (NVAR) partners with George Mason University's Center for Regional Analysis and turns to what academic research tells us about optimal timing for homebuying that can help potential market participants make this crucial decision with confidence.

The lifecycle approach to homebuying

Economists have found that homeownership affects other investment decisions. Explicitly, renters need more aggressive and risky investment portfolio positions, such as more stocks compared to bonds, to make up for the difference in wealth creation associated with homeownership. Of course, there is a beginning point of financial readiness for homeownership. The optimal timing for home purchase depends on three critical factors: financial readiness, your current life stage, and market conditions

Financial readiness: Capacity and stability

Given the importance of housing as shelter and investment, housing decisions should align more with career and financial stability and income trajectory than with arbitrary age milestones. Financial capacity is crucial in homebuying decisions. A good rule of thumb is the debt-to-income ratio (DTI). If your monthly debt-to-income, including cost of housing (mortgage, property taxes, insurance) plus credit cards, student loans, and car loans— sometimes called the back-end ratio, is at or below 36%, you will likely find better mortgage options. Substantially below 36% DTI, you're good to go, based on this single measure. In the 40-50% range? It may work, but your risk is higher. If your DTI is higher, other personal financial conditions need to be very solid.

Down payment adequacy is the second measure of financial capacity. Some mortgage programs allow buyers to have as little as 3% down, but the research literature indicates that buyers with at least 10% down have improved long-term financial outcomes. Having a larger down payment creates immediate equity and is, itself, a provider of financial stability.

Financial advisors recommend maintaining 3-6 months of expenses in liquid savings. Homeownership brings unexpected costs and research shows that buyers without adequate reserves are more vulnerable to financial stress. This is also a timing issue. When housing supply is especially tight, buyers may have to take a home in an as-is condition. In that case, the homeownership calculus may require having sufficient funds for a down payment AND immediately available repair funds.

However, it's not just about financial capacity. Income stability is a stronger indicator of successful homeownership than absolute income levels. Homebuyers need to be aware of employment trends for their firm, industry and occupation. Consider the current environment for career federal government employees. This is not to instill fear — just be aware of the market and be ready to create a plan if you need a "what's next" in your career.

Life stage considerations

Life stage matters more than chronological age. Being in an established career, beyond entry-level jobs and with an identifiable career path comes with income stability. A winding career path is perfectly acceptable; just have a path. Geographic stability is a life stage. If job or family circumstances will require a move within five years, recovering the costs of buying and selling a home could be challenging. Partnership status and family composition come into play here too. Surprise! Are you welcoming twins, or triplets, to your housing needs?

Understanding market conditions

Timing the market rarely works. We can never know exactly when a housing market is at a peak, or trough, in real time. Personal readiness should be the driving factor. Buy a home for the long term. The same goes for mortgage rates. The conditions that led to mortgage rates falling to sub-3% levels was a statistical and historical aberration. Current rates reflect normal long-term averages. If you happen to get into a mortgage when interest rates are running a bit hot, be ready to refinance on a down cycle.

While it's impossible to time the market, one thing is clear: Over the long term, real estate remains one of the most reliable wealth-building assets. Historical trends suggest that consistent buyers — those who enter the market when personally ready rather than waiting for ideal conditions — tend to fare better financially over time.

Behavioral factors in homebuying

Behavioral economics research shows that emotional readiness correlates strongly with successful homeownership experiences. Fear of missing out (FOMO) can lead to poor timing decisions. Buyers motivated primarily by market fears rather than personal readiness will more likely experience regret and financial stress in homeownership. These fears often surface when interest rates rise or when news headlines suggest home prices may fall. Some buyers feel pressured to act quickly before conditions get worse, while others hold back, waiting for a major shift that may never come. These reactions can lead to rushed choices or missed opportunities. Staying focused on your own financial readiness and long-term plans—rather than short-term market movements—leads to more confident and sustainable homeownership decisions.

Making your decision: Evidence-based guidelines

The research literature supports that you're likely ready to buy when you can affirmatively answer these questions:

• Do you have stable income with at least two years of employment history?

• Can you afford monthly payments while maintaining other financial goals?

• Do you plan to stay in the area for at least five years?

• Do you have adequate savings for a down payment, closing costs and emergencies?

• Are you prepared for the ongoing responsibilities of homeownership?

The right time to buy is when your personal financial situation and life circumstances align, not when you reach a certain age or when market conditions seem optimal. Homeownership, like life, is a marathon, not a sprint.

Key takeaways

As a professional association committed to advancing real estate knowledge and consumer understanding, NVAR encourages prospective buyers to approach homeownership decisions with a balance of financial preparedness, emotional readiness and long-term perspective. Working with a knowledgeable Realtor® can help buyers weigh these factors effectively and move forward with greater clarity.