Can't Buy a House? Here's How to Think Differently About Your Savings Goals

Your down payment fund could use a rebrand

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It’s 2024 and home ownership still seems to be pricing far too many prospective buyers out. Mortgage rates continue to hover between 7 and 8 percent and bidding wars and a lack of inventory are the norm. There was even a recent Wall Street Journal report stating that it’s now 52 percent more expensive to buy versus rent.

Cue the internal dialog: If home ownership—a traditional American ideal—isn’t in the cards, how should I redirect my down payment fund? And am I a financial failure if I do? We asked financial experts Tori Dunlap, founder of Her First 100K, and Kelly Ann Winget, founder and CEO of Alternative Wealth Partners, the best way to play the long game with your cash and savings goals.

Meet the Experts

Tori Dunlap is a Seattle-based money expert and founder of Her First 100K, a money and career platform for Gen Z and Millennial women. She’s also the author of Financial Feminist: Overcoming the Patriarchy’s Bullsh*t to Master Your Money and Build a Life You Love.

Kelly Ann Winget is the founder and CEO of Alternative Wealth Partners, a Dallas-based private equity firm focused on blended portfolios and alternative assets.

1. Reframe the Way You Think About Building Wealth

Dunlap—a multi-millionaire who does not own any property herself—is clear: You don’t have to have real estate investments to bolster your wealth. “Home ownership in America as it currently stands has become a privilege vs. a natural expectation,” she says, adding, “It’s true that for the average person in America, if they have a positive net worth, it’s because they own a house, but there are alternative wealth-building approaches to consider that don’t involve real estate.”

Dunlap’s suggested approach for redirecting your savings if home ownership is no longer in the cards? Invest it. “Traditional stock market investing is done through tax-advantaged accounts like a 401k or IRAs, but you can also just open a general brokerage account,” Dunlap says, noting that investments are where the majority of her wealth is. The benefit comes from the compounded interest. She adds, “Interest rates for homes are hovering between 6 and 8 percent, while the average interest rate for the stock market is between 7 and 10 percent—sometimes more, sometimes less. That’s why, if you’ve got a mortgage rate that’s on the lower side, it’s actually more advantageous to invest vs. pay it down fast because you’ll make more money.”

Winget agrees: “In a typical market, a real estate investment will grow somewhere between 3 and 5 percent a year, which is not the reality we’ve lived in recently. You want to find an alternative asset that will mirror that growth in a safe way. The stock market will do it. Bonds will do it. Right now, a high yield savings account—with interest rates between 4 and 5 percent—might also come close to that.” Bottom line: This is an opportunity to sink your cash into those long-term investments like you would a house that will provide the same kind of return and have similar liquidity.

2. Consider Speculative Investments

A quick disclaimer: This advice is for someone with a positive net worth, which means you’ve got some slush money to spare. “Speculative investments are about diversifying your portfolio and taking a risk on something you’re interested in,” Dunlap explains. “I don’t personally own crypto, but I know people who want to invest in something like it.” (Dunlap’s choice of a speculative investment is art because it makes her feel fancy and sophisticated, joking that she owns “a dot on an Andy Warhol painting.”)

But speculative investments should come with a limit. “This isn’t a place where you sink your entire life savings,” Dunlap says. But if you want to spend about 5 percent of your investment portfolio on something that feels a bit more fun or is something you believe in, this is a great approach.

Additionally, this is where a vacation fund comes in. “If you have a substantial amount of money saved, but ultimately decide you’re not going to use it for what you originally intended it for—like a down payment—maybe take a little bit of it and go on a nice trip,” Dunlap says. From there, you can put the rest of it to use.

3. Stop Fretting That Being a Renter Is Bad

“My well-meaning parents told me over and over again: ‘You need to buy property or else you’re flushing money down the drain,’” Dunlap says. But the day she was set to close on a condo, she backed out and credits it as the best financial decision she’s ever made. “Renting gets a bad rap, but when you do the math, it’s actually cheaper to rent in most U.S. cities than it is to buy when you look at interest rates combined with prices. On top of that, you get to maintain flexibility. If there’s a problem, you can dial your landlord instead of having to sink more money into your home.”

Today’s market is also part of the problem. “Buying a home nowadays comes with constant turbulence—you find the property of your dreams, but then you have to fight seven people for it, as well as put in even more money than asking. You’ve then got property taxes and, if you can’t make the 20 percent down payment, there’s PMI or private mortgage insurance. In many cases, there are also HOA fees,” Dunlap explains. Again, you really have to do the math on what is reasonable for your finances and your future.

4. Go Partially In on Real Estate

Dunlap and Winget both tout the modern option of co-investing in a property instead of owning it yourself. “Let’s say you want to buy a $500,000 house for yourself, but you don’t have $100,000 to spend on the down payment, but you do have $20,000,” Winget says. “You could buy an investment property or partner with other people to invest in the property as a way to get involved in real estate without buying property for yourself.” Co-ownership is also an option. Dunlap says she has friends in Seattle who bought a house with another couple. “They bought a house together and found a way to split it up,” she says. “This could be a duplex or one might live on first floor and the others live on the second floor. Of course, this only works with someone you financially and emotionally trust, but there are real estate options to consider even if you can’t go all in.”

5. Reevaluate Your Savings Goals Regularly

Dunlap recommends a once-a-month money date where you sit down, cocoon yourself with your comforter (or your partner) and look at your money with a goal of making decisions. “The main question you need to ask is: ‘What do I want?’” she says. “It sounds ridiculous, but it’s about assessing how to use your money as a tool to accomplish your goals.” In other words, this is the moment to re-assess all your cash—down payment fund included. Maybe you need to play the long game to get the house you’re coveting, but maybe you want to rethink the way you’re directing those funds. “It’s about working backwards to get what you want. For some people that might mean admitting, ‘No, I don’t like living in one place, I want to be transient, I want to travel.’ For others, that might uncover the realization, ‘No, I actually do want to buy a house.’” Regularly assessing your financial goals and making them specific and trackable is the key to progress and, ultimately, wealth.

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Rachel Bowie is Senior Director of Special Projects & Royals at PureWow, where she covers parenting, fashion, wellness and money in addition to overseeing initiatives within...