Homeownership isn’t a good or bad idea on its own. It has everything to do with your own situation. Sometimes, buying a home is the smart thing to do; other times, it really isn’t. Whether or not it’s smart for you will depend on a few different factors. Here’s what you should keep in mind.
The biggest argument for owning a home is that it’s an “investment.” But a lot of people overestimate the return on this investment. This is a big mistake, and it can lead to extreme dissapointment when housing prices fall. Sometimes we think of real estate assets as a hedge against inflation, this is true, but there are better hedges, including a well balanced stock portfolio. So, think of your home as a roof over your head that has a fixed monthly payment. In this case, as long as you can afford the monthly payment, it doesn't matter if the price goes up or down.
Do you plan to move anytime soon? If so, you might not want to risk a capital loss and taxes on purchasing a property. It's nice to own a home when it's cheaper than renting, but if you're not going to live there long enough to defer capital gains tax, or housing prices might fall, this can quickly turn the "value" you thought you were receiving into a major loss.
If you're sure you want to buy, then you're going to need to figure out how much you can actually aford. A good rule of thumb is that your mortgage payment should be less than 30% of your total takehome income. If you're above this amount, it usually leads to problems. Keep in mind also that while your salary will fluctuate, your mortgage payment will not. It's important to know what you can afford now, and in the future, especially in case of hard times.
Ultimately, buying a home is a personal choice you’ll have to weigh, considering your own circumstances. Homeownership is not inherently a smart or dumb decision—it depends a lot on individual factors and where you’re at in your life. But these considerations should at least put you in the right direction.