A recent report showed 10 areas in the country where real estate was selling
- The factors driving real estate in these areas are very narrow…
- They view as an investment
- They have to look successful
- Owning real estate into the equation
A recent report showed 10 areas in the country where real estate was selling a lot better than most other locations, even big cities. In fact, in some of these areas real estate is more expensive and selling faster than their neighboring big cities. Why is this? Who is buying real estate?
The factors driving real estate in these areas are very narrow:
- Most of the real estate is being purchased by millennials, young adults in their 20s and 30s.
- It’s their first purchase of real estate.
- They haven’t gone through any big real estate downturn in their lives. In fact, they may have been in school during the last big real estate frenzy.
Not having experienced the trauma and loss of owning real estate they blindly go into something they view as an investment. Only once they are saddled with their “investment” do they begin to realize all that’s entailed in owning real estate.
Most of these individuals or couples have good jobs and make more money than the median incomes in that area and surrounding areas. You also see that they spent their new found wealth on many other things before they bought real estate like fancy new cars and new clothes to wear to their big jobs – after all they have to look successful. They take wonderful vacations to exotic places and spend much of their time partying at the popular clubs, frequenting the “in” restaurants and entertaining their friends.
Now, inject the expense of owning real estate into the equation with maintenance costs, insurance costs, taxes, HOA dues, and of course, new furniture, landscaping and many other hidden expenses they didn’t see coming. These additional expenses now cause them to stay home and not be out partying with friends every night. They stay home and work on their real estate. It doesn’t take too many months to see how their past expenses, the things they bought on credit for which they make monthly payments, start to look overwhelming. The new cars don’t have the appeal they had before. Home owners find themselves buying clothes and tools to work in the yard rather than to impress their co-workers and friends.
Soon they wonder where all the money is going and why they spend more than they make each month. This is the illusion of real estate ownership and really what it does to your life. Real estate is an anchor that prevents your mobility. Even if you are presented with a better job across the country you are anchored down by an “investment” that is dropping as prices soften when some new area gets hot or the economy turns abruptly.
Real estate is the new thing that connects you to new friends that are in the same predicament that you find yourself now in. The wonderful house parties turn into cookouts with other couples and their young children. So when you think about real estate being a wonderful investment look at how it will change your life and decide if you really need to own real estate, or rather, let real estate own you.
QUESTION: What should readers take away from this message today?
ANSWER: That real estate is not an investment anymore; it becomes a money pit.
QUESTION: Why is this information timely?
ANSWER: This information is timely because it appears that these millennials didn’t learn anything by watching their parents lose so much of what they had in the last real estate crash.
QUESTION: How can readers best apply this information to their lives right now?
ANSWER: People thinking about purchasing real estate should put off that decision for at least two more years to see how the economy looks then.
COMMENTARY: The economy has never been more unpredictable than now. So why would you want to buy real estate? Did your parents or real estate agent tell you it’s the best investment you can make? Read some of the previous CR News Reports© from this month and you will further understand why buying real estate, or anything else you can do without, would be a disastrous decision. Hold onto your money and brace yourself for economic instability, not spending. If you own real estate and are feeling pressured by it, that’s a warning sign that you are over-extended in more areas than real estate and need to sell things – not buy more stuff. Don’t wait until it’s too late.