Why are Millennial real estate investors trending? According to a Real Estate Investing Report by Harris Interactive, 55 percent of Millennials said they are interested in real estate investing. With more money in the bank (1 in 6 Millennials have savings exceeding $100k, according to a Bank of America Survey), this generation is leading the housing market charge and changing the real estate investing forecast. Let’s look at five key reasons they are leading the charge.
1. Millennials Now Outnumber All Generations in the U.S.
Millennials, people born between 1982 and 2000) are now the largest age group in the United States.
According to a Pew Report, over 75.4 million Millennials live in the United States. With a greater Millennial population than any other generation in the U.S., they have had and will continue to have the most significant impact on how the housing market shifts. This is the #1 reason for understanding Millennials’ real estate investors and their interests and strategies.
2. Millennials are Stock Market Skeptics
While Millennials are still investing in the stock market, a more significant percentage believe real estate produces better returns on investments than the stock market. One reason for this mindset is that many Millennials were in college or graduating during the economic downturn of 2008 and had difficulty finding jobs. Although the housing bubble burst, contributing to the stock market crash, Millennials remain skeptical of investing in the stock market.
In 2007, almost two-thirds of Americans were investing in the stock market. Ten years later, just over 50 percent were investing in the stock market, while the other half were looking to invest in real estate. These real estate investor statistics clearly show a shift in investor strategy and preference.
3. Real Estate Has Bounced Back and Millennials Noticed
According to an American Modern Insurance Group study, 86 percent of Millennials plan on owning a home someday, even though they choose to rent now.
According to Fannie Mae, 85 percent of Millennials agree that real estate is a good investment. This generation values real estate over other assets (like intangible stocks) because they lived through the Great Recession of 2008.
Millennials’ feelings toward the stock market seem to be a lasting side effect of the greatest economic downturn since the Great Depression. Interestingly, the trend for Millennials investing in real estate is drastically different and continues to be their preferred method of investing.
While Millennials get a bad reputation for being lazy and entitled, they’re proving to be very savvy investors, producing greater investment returns. This generation has noticed a steady rise in specific real estate markets, with population and job growth, appreciation potential and monthly cash flow opportunities.
4. Millennials See the Value of Owning a Tangible Asset
Previously, investing in real estate was difficult for the younger generation because it required a large amount of money or a down payment. Now, online real estate investing platforms offer lower-cost options for real estate investing via crowdfunding.
The benefit of owning a tangible asset rather than stocks is the appreciation potential for buy-and-hold investors. Even if a housing market struggles for several years, history shows that a property will eventually appreciate or grow in value. Savvy Millennials investing in solid markets should expect steady monthly cash flow from their real estate property investments.
5. Millennials are Investing in Real Estate Online
Online real estate crowdfunding investments have picked up in recent years. Online crowdfunding allows individuals to invest in real estate for a smaller initial investment. Many crowdfunding companies require anywhere from $500 to $5,000 for initial investment. They also don’t have to bother dealing with the time and hassle of being a landlord, as most crowdfunding or syndication companies outsource property management.
Millennials find this investment attractive because of its flexibility, variety, and low cost. It’s also easily accessible and manageable online, another driving force for Millennial real estate investors.
Final Thoughts
With so many new opportunities for people of all ages to invest in real estate, the housing market will continue to shift. Generally, Millennial real estate investors see a greater potential return on investments than the stock market. Now outnumbering all generation segments, Millennial real estate investors are looking to earn passive monthly income, stockpile money for retirement, and live the lifestyle they want through investing in real estate.
