I’m no expert on housing, but certain things are starting to stick out to me. My career here at The Basis Point has been a crash course in parsing data and consumer sentiment and finding the truth in between.
Redfin just published data that shows more than half of older millennial and younger Gen X homebuyers (those aged 35 to 44) are suspicious of real estate as a long-term investment. They’re the only age group that prefers investing in stocks to real estate as a way to build wealth.
Redfin suggests that the housing crash and Great Recession soured this age group on investing in real estate since they saw housing prices crater.
It struck me that people in my age bracket and those younger all overwhelmingly preferred real estate as an investment, because that confirms my own personal biases.
The group of Gen Xers and older millennials in question were around my age when the economy and housing went to hell in 2008—they’d spent some time in the workforce and might have been young homeowners themselves. Then they saw their newly-rising net worths disappear in the crash.
What Redfin’s headline misses, though, is that this age group seems pretty evenly split on real estate versus stocks—only 52% prefer the stock market. It’d be more telling if we saw 60% of them favor stocks instead of 52%. This goes to show the dissatisfaction with the financial system the Occupy Wall Street generation feels.
I want to draw attention to the attitudes of the younger homebuyers—it looks like they overwhelmingly favor real estate. These folks might have been too young to really experience the housing crash but the lasting effects of the Great Recession and Occupy might have colored their perception of the stock market as an investment. It’d explain why they’re all-in on housing.
That’s how it is for me, at least.
Companies like Robinhood are trying to pull some reverse psychology and tap into that rebellious Occupy attitude to get young people to invest in stocks, for better or for worse.
For now, it seems that the housing industry can benefit from young people’s enthusiasm for real estate if it can pull some affordable housing stock out of nowhere.