In its September issue, Money Magazine reported that U.S. millionaires hold just 6% of their wealth in investment real estate but 44% in equities. With the stock market at a record high, is it time for the wealthy to shift more assets into real estate?
Since the peak of housing prices before the Great Recession in 2006, the average U.S. home sales price is up just 4.3% according to Case Shiller Index, while the Dow Jones Index is up 255%. Home prices have increased 30%-plus in recent years but those gains only served to erase the losses from the recession. This after the average U.S. home price routinely gained 4.3% PER YEAR in the decades prior to the recession.
Lots of would-be real estate buyers, especially Millennials, are afraid that the housing market will experience another downturn like the housing market collapse of 2008-2010. However, that event was a once in more-than-a-lifetime event under circumstances that don’t exist today. Further, the National Association of Realtors home price tracking index shows that 2008-2009 was the only time in the last 50 years that home prices declined. Even Case-Shiller shows home prices rose during the Great Depression of the 1920s.
Millennials are one of the reasons to be bullish on real estate. They are the largest home buying group in history and are just beginning wade into the real estate market. If you are a parent or grandparent of a Millennial who has too much of your portfolio in stocks, now is the time to re-adjust and add some investment real estate. You will also be giving your offspring a path to their own wealth and have the opportunity of passive returns on your money. Also, don’t forget that real estate IRAs are an excellent way to hedge against a stock market downturn although all real estate held in a real estate IRA must be for pure investment purposes (no vacation homes, etc.).
Sold? Are you ready to take advantage of the opportunity real estate offers right now? Talk to a Realtor first (one of ours, preferably). There are up-and-coming areas all over Atlanta that offer the opportunity for double digit returns in the near-to-long term. We like Chamblee, East Atlanta, and the Westside (including West End) in particular for pure investment purposes. Also, our Beacham Bellwethers track the tried and true areas of town that traditionally do better than the market as a whole.
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Beacham & Company, REALTORS is Atlanta’s top-selling luxury real estate office. The firm was founded in 2006 by Glennis Beacham, one of Atlanta’s most celebrated real estate agents. The company sells nearly $1 billion in real estate annually among its 100 agents who are the most productive in the state by dollar volume sold.