Buying a Home in Your 40s? Here’s What You Need To Know
By Erica Sweeney
Nov 17, 2021
Have you celebrated your 40th birthday? Then you’ve probably found your stride in life and, hopefully, have squirreled away some savings. That makes it a great time to either buy your first home—or think about upsizing.
And you’re not alone. People aged 41 to 55—known as Gen X—made up 24% of homebuyers over the past year, according to a report from the National Association of Realtors®. And 22% of them were first-time buyers.
“Life changes as people age, and homebuyers are no exception,” says Danielle Hale, chief economist of Realtor.com®. “While some priorities when buying a home are fairly consistent across ages—things like wanting a garage, a quiet location, and an updated kitchen—others can change over time.”
So if you’re in your 40s and thinking about buying a new home, here are the main things to consider.
What’s driving you to buy now?
“The most important considerations regardless of homebuyer age are personal,” says Hale. “Ask yourself if you can commit to being in a new home for the three to seven years that it will take to make the purchase financially advantageous.”
Once you’ve determined you can commit to buying a new home, you can figure out what you want that home to be.
Consider your family and career
“In your 40s, you’ve settled into your life and routine, and you’re able to plan a bit further down the line for the most part,” says Trevor Halpern, founder of Halpern Residential at North&Co. in Phoenix. “These are powerful years where you’re still young enough to strive and dream, but old enough to keep those dreams grounded in reality.”
The biggest reality check when it comes to a 40-something’s home purchase? Children and jobs.
Most Gen X homebuyers have at least one child living at home. And a change in family status—such as marriage, divorce, or the birth of a child—were the top reasons Gen Xers purchased a home last year, according to the NAR report.
So if you’re looking for a new home, start your search in a good school district—that’s also near your job. With more offices opening up for hybrid working arrangements, you don’t want to be commuting for hours, even if it’s just a few days a week.
Upsizing your living space
Did you purchase your first home in your 20s or 30s? Then your 40s may be a good time to move to a larger place.
“Growing households, new career opportunities, and increased income allow people to purchase that move-up property,” says Anthony Carr, associate broker at Re/Max West End in Falls Church, VA. “They can get out of the starter home and into the next house.”
Indeed, homebuyers aged 40 to 54 purchased the largest homes recently, averaging 2,100 square feet, according to the NAR report. This age group also bought the second-most expensive homes on the market, with prices hovering at a median of $305,000.
So when looking for a home, consider whether you want extra space, storage, multiple living areas, and more bedrooms. But focus on practicalities versus hopeful wants.
Carr advises looking for a home with the “highest and best use.”
“It’s a term I throw around quite a bit with my clients in their 40s looking for their forever home,” he adds.
Future financial obligations
When you hit your 40s, you may be on more solid financial footing than you were in your 20s. But that doesn’t mean you should buy the priciest home on the block—even if you can afford it.
Instead, consider the expenses and financial obligations that will come up through your 40s and into your 50s. These could be college tuition, health care costs, and retirement savings.
“You don’t want to overextend yourself in a home purchase and not have the resources available to fund the other important aspects of your life,” says Halpern.
Luckily when you buy an affordable home in your 40s, you still have time to pay it off or build equity before you reach retirement.
“Buy as much as you comfortably can at this stage if you’re in an upwardly mobile career,” adds Carr. “A $2,000 to $3,000 payment today is going to seem like a steal in 10 to 15 years.”
Not ready to buy again? Consider refinancing
Mortgage interest rates reached record lows in 2020 and 2021, hovering around 3%. If you have equity in your home and haven’t locked in a low rate, look into refinancing. Doing so will likely save you money in the long run.
“You should definitely be refinancing right now to take advantage of the low rates because they’re not going to last forever,” says Glen Pizzolorusso, a licensed associate real estate broker with Compass in Connecticut’s Fairfield County. “Interest rates are going to go up over the next year or two.”
Whether you’re refinancing, upsizing, or buying your first home, Halpern says 40-somethings often have the advantage of wisdom, financial and professional security, and a robust personal life.
“People in their 40s have a great combination of energy and experience,” he says. “So buying tends to not be as overly cumbersome as it may be in earlier decades.”