Millionaires’ love of real estate is diminished by six-year housing slump, according to a new Millionaire Corner survey.
Few Millionaires would saying buying a home was the best financial move they’ve ever made, according to a survey of 1,400 investors conducted by Millionaire Corner in May that suggests the prolonged housing crisis has tarnished Millionaires’ love of real estate.
A home is the most common investment of affluent households. Millionaire Corner research shows that nearly all Millionaires (95 percent) own their primary residence, but few would consider buying their home a brilliant financial move. Millionaires are much more likely to say that their best financial decision ever was “making consistent investments in a retirement plan” or “having a frugal lifestyle to allow me to save my money.” Less than 13 percent say purchasing a home was the best financial decision they’ve ever made.
More likely than not, Millionaires – who have investable assets of $1 million or more – have seen their home values decline over the last six years. The latest report on national home prices by S&P Case-Shiller shows that home prices have fallen to their lowest levels since mid-2006. More than one-fourth of Millionaires report substantial losses to their home values over the past five years, according to a survey conducted by Millionaire Corner in March, and more than 40 percent describe their home value as “lower” since the housing market meltdown. About 14 percent of Millionaires say their home value is unchanged compared to five years ago.
And, the majority of Millionaires appear to feel the market has further to fall. Less than half (42 percent) believes it’s a good time to invest in real estate, according to a study completed by Millionaire Corner over the first quarter of 2012. Nearly one-fourth says their home – which among Millionaires has a mean value of $516,000 - is not a stable financial asset, and 9 percent believe it’s more prudent to rent than own a home in the current economic environment.
Real estate investments have traditionally played a key role in building wealth, according to Millionaire Corner research that shows 29 percent of Millionaires own a second home or vacation home with a mean value of $278,000. Sixteen percent own residential rental property with a mean value of $367,000 and 16 percent own undeveloped land with a mean value of $158,000. Eight percent own other investment real estate for a mean value of $204,000, and 4 percent own commercial property with a mean value of $204,000.
Less affluent investors – those with less than $100,000 to invest – are most likely to rank buying a home as the best financial decision they’ve ever made. According to Millionaire Corner research, home ownership accounts for a great share of total wealth of non-Millionaires compared to Millionaires.