Young Buyers Taking Stock in Real Estate by Steve Viuker
Younger people are looking to real estate to park their money; not the stock market. And many; aided by their baby-boomer parents, are purchasing in the high-end segment.
The Wall Street Journal pointed to a study of the wealthiest 10% of Americans conducted by American Express Publishing and the Harrison Group. The study also shows 24% of millennials have grown up wealthy, compared to 7% of baby boomers and 9% of Gen X Americans. And a new report issued by the National Association of Realtors shows millennials compose the second-largest group of recent home buyers, with 28%. The older Gen X segment ranks first.
The Harrison report also said the wealthiest 10% of millennials will account for one fifth of all dollars spent on primary-home purchases over the next three years. Jim Taylor, vice chairman of the Harrison Group and an author of the study said, ??For the first time since the pre-Depression, Gatsby era, we have a generation of kids whose parents made a great deal of money and are giving a great deal of it to their children,? says Prior to this, very few families had money through inheritance. There is a living wealth transfer currently taking place that this country hasn?t seen in decades.?
And the NAR report showed least 80 percent of buyers who are aged 57 and younger bought a detached single-family home, while buyers over the age of 57 to purchase townhouses and condos.
Other findings of the reported stated:
Among all generations of home buyers the first step in the home buying process is looking online for properties for sale.
Older buyers are less likely to finance their home purchase in comparison to younger buyers; when they do finance, the share of the home they financed is typically smaller.
Among the generations, Gen X is the largest group who are recent home sellers followed by both younger Baby Boomers and older Baby Boomers, the Silent Generation, and Gen Y. The G.I. Generation represented less than 1 percent of recent buyers.
?The average age of first-time buyer tends to rise as home prices rise, and fall when they decline.? As housing prices remain down from the market?s peak in many communities around the U.S., homes have become more affordable for younger buyers,? said Gary Malin, President of Citi Habitats, a New York-based real estate firm.
?Here in New York, we are seeing a lot of young first-time buyers, even though our market has largely recovered.? ?The rents in our city have surpassed the pre-recession highs, so despite our high prices for real estate, those who can afford to buy, are, regardless of age,? said Malin. ??Furthermore, since we are not so far removed from recent economic meltdown, many young people have taken a cautious, or even skeptical, view of investing in the stock market.? Many have seen friends and family members lose a lot of their savings in a matter of minutes.?
?While investing in the financial markets can seem abstract, owning a home is a concrete investment ? and one that serves a dual purpose,? Malin told totalmortgage.com. ??You can get a lot more enjoyment out of a home than you can with shares of a company.? I also think in uncertain economic times, people gravitate back to the basics, and nothing is a more basic investment than shelter for you and the ones you love.?
To read the NAR report:
http://www.realtor.org/sites/default/files/2013-nar-home-buyer-seller-generational-trends-2013-07-08.pdf
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