Is Buying Property Still a Good Idea

Boomers Keep Telling Millennials To Invest In Property. Should They Listen?

When it comes to purchasing a home, Baby Boomers and Generation Xers often advise that you should do so as soon as possible since it is an excellent investment. Right now, real estate investments appear to be preventing homes from becoming affordable, and it's a fool's errand to think that they only go up in value. It's difficult to know what the right move is.

If you browse around Zillow, looking for a home in Manhattan, you'll be hard pressed to find anything in your budget. (The median selling price on homes in the borough is $1.1 millon, per Realtor.com.)

It's time to get out of the mindset that buying your own house is when you've truly made it, especially if you're looking to call one of the most costly metropoli in the world home.

The allure of homeownership is heightened by the substantial increase in home values during the last several decades. According to Federal Reserve data, median house prices in the United States increased 84.79% between the last quarter of 2009 and the third quarter of 2021. The S&P 500, on the other hand, outperformed to a far higher degree, increasing 307.49 percent throughout the same period.

When it comes to homeownership, the difference in perspective is critical. Today's grandparents think of it as a wonderful investment, while Gen Zers see anguish and suffering. It's because the real estate market in the 1950s was significantly different than it is today: A post-war boom in homeownership, coupled with racist and discriminatory lending policies that excluded entire communities from the market, made it simpler for others to profit from property inflation (and assume that life was that good for everyone). That's not the same housing market in which we now live, to put it another way. Simply stated, house prices have grown as a percentage of our incomes, making it more difficult than ever to join the market. Millennial homeownership, on the other hand, is on the rise.

Don't get me wrong—home ownership is fantastic if you can afford it. You may borrow against your home in difficult financial situations, and you get to enjoy the benefits of your investment while keeping it.However, don't forget that you may get exposure to the housing market without actually buying a home: If you want to diversify your portfolio some more, consider real estate investment trusts (REITs) and private real estate investing platforms like Fundrise.

While we can't predict what will happen to the real estate market in the near or long terms, real estate has shown to be a more stable investment than the S&P 500. Will it rise further? Nobody knows for sure. But if you're thinking about purchasing a house in one of the world's most expensive cities fills you with fury, feel free to keep renting.

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