I have to agree with poster “toast” at #43.
We have very low interest rates. Housing is already spiking in many markets driving up prices now. Private Mortgage Insurance will let you get in now and fixed rate in inflationary times with your income rising due to inflation alone protects you from rent inflation.
Disciplining yourself to save or to pay for PMI are all the same. Get in now and build equity. A rising market and the cost of a new appraisal in 30 months may let you get refinanced without the PMI in a short time if the market booms in your area.
It’s a dicey market to be giving advice like that in.
I own two homes and the price appreciation over the last year has been absurd. It’s simply not sustainable and if the CDC moratorium on rental evictions is truly overturned you will most likely see a large number of landlords trying to get out of the rental business and listing the homes. This should solve some of the inventory problem.
I also imagine that there will be some normalization with the materials supply chain issues over the next year or so and we will see housing starts increase.
And I’m sure that you are aware of what happens in the event the Fed does raise rates. Higher interest = less money that people can afford for the monthly mortgage payment and prices will have to adjust.
If the OP were my kid I would tell them to first eliminate all interest bearing debt and then to stick with the saving 400 a month plan. Even if they bear the brunt of inflation related depreciation in spending power they will still have options open to make an informed decision when the time comes. And the flexibility to change their minds.