Group is less likely to see a home as a good investment but are more willing to invest in commercial real estate
Younger Americans are less likely to purchase a home, but show a greater interest in owning commercial real estate, according to recent national studies.
Seventy percent of BabyBoomers think buying a home is a safe investment, but that opinion is shared by only 62 percent of Americans aged 18 to 34, according to a quarterly survey released on Monday by Fannie Mae.
While rates of homeownership are declining for all Americans, the sharpest drops have been among Gen X and Gen Y generations, according to U.S. Census data. For Gen Y, homeownership rates fell by 4 percent to 39.1 percent between 2004 and 2010. A similar decline took place among Gen X, who saw homeownership rate fall from 69.2 percent in 2004 to 65 percent in 2010.
BabyBoomers experienced a smaller decline of 2.7 percent decline and still enjoy a relatively high rate of homeownership of 79 percent. Homeownership remains the most stable among retirees, who experienced a 0.6 percent drop in homeownership since 2004. More than 80 percent of Americans older than 65 own their home.
Homeownership may be trending down for younger Americans, but Generation Y is more likely to invest in commercial property, according to a survey conducted in April by Spectrem Group. The Chicago-area market research firm specializes in affluent investors. Survey respondents have a net worth of $500,000 or more, excluding their primary residence. Young affluent investors are less likely to own a primary or second home, but are much more likely to own rental property, commercial property or overseas property.
“Younger investors were disproportionately affected by the housing meltdown, and learned the hard way that their house was not a stable financial asset,” said Catherine McBreen, Spectrem’s managing director. “Young, savvy, affluent investors are now seeking income, rather than appreciation, from their real estate investments.”
More than one-third of investors under the age of 40 own rental property, compared to less than one-fourth of BabyBoomers, Spectrem found. Nearly 20 percent of Gen Y investors own commercial property, compared to 12 percent of BabyBoomers. Gen Y investors also prefer overseas property, with 13.2 percent owning foreign real estate compared to 3.8 percent of BabyBoomers.