For years, we’ve been touting the benefits of investing in real estate.
While we certainly acknowledge, and openly discuss, the risks and challenges of property investments, we also point out that it can bring excellent returns on your investment.
Bankrate, one of the biggest information sources on financial and investment topics, recently released the results of their consumer survey, which sought to find America’s favorite investing option.
The results showed some interesting finds. For starters, stocks were the top choice for Americans, with 28% of respondents saying that stocks are their choice if they had to invest money that they would not need for 10 years. But right behind stocks came real estate, which garnered 26% of the respondents.
Property: Where Does it Land as an Investment?
Just over a quarter of respondents said they preferred real estate as their top option. This is actually an interesting result; one might assume that in a time of market volatility, with the coronavirus creating significant drops in the economy, people would be less likely to choose stock. But real estate had a rather impressive showing in the survey, which isn’t terribly surprising if you consider the benefits of owning real estate.
Bankrate organized their information into generational demographics. Here’s where things get interesting. Among “younger millennials,” (ages 24-30) the youngest group on the survey, only 22% preferred stocks as their top option, while 30% preferred real estate. With “older millennials,” (31-39) the preference was back to stocks, with 33% choosing the stock market and only 19% choosing real estate.
Generation X was split. Both stocks and real estate got 26% of the survey, making it an even tie among this generation.
For baby boomers, the preference was back to real estate. 31% of respondents from this generation preferred real estate, while only 26% preferred the stock market.
The silent generation, who were born between the Greatest Generation and their children, the baby boomers, highly preferred the stock market. 43%, the largest percentage of any generation to any investment option, choose the stock market for their money. Only 17% preferred real estate.
Why Do Baby Boomers and “Young Millennials” Prefer Real Estate
Of all the five different generational groups separated in Bankrate’s survey, two, “young millennials” and baby boomers, preferred real estate over all other options. For one generation, retirement is a theoretical concept; for another, retirement is ra real, pending issue. One group is just starting to have children, while the other is likely enjoying grandchildren and even great-grandchildren.
That begs the questions: Why do two generations, at very different points in their lives, prefer the challenges of real estate over stocks, gold, cash, CDs, cryptocurrency, and other forms of investments?
While common factors may be hard to find, we can make some speculations about both generations to at least guess why these were the groups that most prefer real estate.
For baby boomers, it would seem that real estate provides a variety of benefits that help them prepare for around-the-corner retirements. Many baby boomers simply aren’t prepared for retirement, and the traditional financial safety nets are no longer present; the safety nets that do exist have holes. Pensions, which used to be a main source of post-retirement financial security, are often not a part of the retirement picture, and Social Security has major flaws, resulting in less reliance on this government-supported option.
Real estate, however, seems to provide diversity and stability. Boomers may already have stocks, but real estate can provide another source of income and financial growth. When baby boomers leave their jobs (and their steady paychecks), real estate can provide monthly payments that allow them to maintain a high quality of life. Real estate also allows boomers to gain independence from the up-and-down nature of the stock market. Sure, the general trend is up, but over the past 15 years, boomers have seen their stock portfolios devastated – twice! Having real estate as a “hard asset” allows boomers to withstand the economic cycles that could cripple their savings just when they need it most.
Fo young millennials, the reasons for landing on real estate as a preferred choice are likely different. Millennials may not have participated in the economic collapse that started in 2008, but they certainly saw the results first hand. Many were in high school, college, or fresh out of college when the stock market collapsed in 2008; they may not have been major investors, but they were old enough to pay attention, and many likely saw the sad results their parents suffered through. This may have made them stock-market skeptics. Technology, which millennials grew up with, has made real estate more accessible than ever before. It seems certainly plausible that millennials’ familiarity with technology has made them more likely to invest in real estate. Crowdfunding, for example, has made real estate attainable with a much smaller investment; this option was not as available to previous generations.
Let Us Help You Launch a Successful Real Estate Investment
Real estate may not be for everyone, and it certainly has risks that need to be taken seriously. But if you have decided to purchase an investment property, let us help with a top-quality mortgage loan.
The right financing can make a major difference in your long-term financial success, so contact our staff today to learn more about investment-property loans.
“Chad – Your team has been nothing short of amazing. Juliann has aggressively followed-up with escrow and gone out of her way to make sure things get done on schedule. Matt and I can’t express to you enough how much we’ve appreciated all of your counsel at the beginning of the process and her execution to see it through to close. As always, appreciate everything that you guys have done to see this through.”
“Thank you for all the hard work (even on weekends!) you and your team have devoted to seeing this through in a very efficient manner. It’s been an easy process for me and, you and your team have been a delight to work with.”
Excellent service!. Recently purchased a property in Northern San Diego County. Chad and his team were recommended to me to check out. The rate he acquired was a full point & a half better than the Broker I have been using for years. His team was exceptional and did great follow through. Definitely 5 star service!”