‘The Millionaire Next Door’ is a Myth to Most Millennials

[tb001]

Maybe, maybe not. Trendy area home prices may appreciate faster than those less-trendy areas. "Location, location, location." I missed out on a lot of appreciation, buying a cheap $90K condo, when I could have bought a $375 house. I could have made ~$400K in just 5 years, rather than $110K.

Yep. We bought in a more desirable area than I was initially looking and property values went up far more in the time we were there.

 

[Rianne]

Yep. We bought in a more desirable area than I was initially looking and property values went up far more in the time we were there.

And then, 2009 hit. Could that happen again, probably not. But property values can fall as much as they can appreciate. Any neighborhood can lose value for many reasons. And they can appreciate for many reasons. New development in the area helped our value...Starbuck's bult a brand new store, awesome grocery store built near us, new schools, many new businesses. Those were not there when we moved in, so more desirable neighborhoods in our community lost value.

 

[statsman]

And then, 2009 hit. Could that happen again, probably not. But property values can fall as much as they can appreciate. Any neighborhood can lose value for many reasons. And they can appreciate for many reasons. New development in the area helped our value...Starbuck's bult a brand new store, awesome grocery store built near us, new schools, many new businesses. Those were not there when we moved in, so more desirable neighborhoods in our community lost value.

Our neighborhood in Silicon Valley weathered 2001-2 and 2009 better than most areas of California and the rest of the country. But now we're seeing property values there drop a lot in the last year despite reasonably good economic numbers. Part of it may be due to a decline in foreign investment in real estate, particularly with Chinese buyers. The tariff and trade battles aren't helping.

In the case of our house, most estimates have it down 5-10% from a year ago and even more from 18 months ago. This type of drop was not typical for us during the time we owned the house from 1995 to last October when we sold it, even during the recessions. It may pick back up going forward, but for now, it feels like we chose a good time to sell and move out of the state.

 

[Texas Proud]

Maybe, maybe not. Trendy area home prices may appreciate faster than those less-trendy areas. "Location, location, location." I missed out on a lot of appreciation, buying a cheap $90K condo, when I could have bought a $375 house. I could have made ~$400K in just 5 years, rather than $110K.

Looks to me that the pct is close to the same... well, the math says you did better...



400 / 375 = 107%


110 / 90 = 122%

 

[HI Bill]

Looks to me that the pct is close to the same... well, the math says you did better...



400 / 375 = 107%


110 / 90 = 122%

If I'd had more available cash to put down, I would have bought an extra two or three condos and rented them out. I was just getting started and couldn't afford 20% down on more than one.

 

[Perryinva]

That kind of difference is unusual. The location affordability index defines the typical demand. If a nice house is $300k, and that is affordable, it will appreciate more % wise than a not nice house at $90k. When the numbers increase, there is often an inversion. The numbers are of course entirely location dependent. $300k can be cheap, average or expensive for an area. $300k is a bit above average here, but there is copious inventory in new builds. But the trend here is moving more urban, & locations of the new builds are not as desirable (suburban) as the built out existing locations, so even though there is more house for your money with new, the older homes cost more per sqft and have greater appreciation. An newer beginning trend around here is buying smaller homes in desirable neighborhoods and gutting and building literally around the house doubling the sqft. One builder even bought an entire neighborhood of rental homes like (5 blocks worth) that bordered a desirable location, razed them and built townhomes and a multi use rental/retail neighborhood. They are selling like hotcakes. The homes bordering that development saw a nice appreciation.

So, yeah, luck and circumstances can play a large part in ending up as MND. It certainly did for me, but I did make and take specific plans and actions to take advantage.

 

[pj.mask]

In the extreme yes. But overall, I respectfully disagree. You can work your A$$ off and overcome many circumstances that are working against you. However, unless you are born with a silver spoon (so to say) if you aren't willing to do the work, and make good choices, your bad decisions will outpace your "good luck" or "good circumstances".

Not sure how you can make up for being born in a bad school district where your immediate society doesn’t value education.

I’m pretty lucky they offered dual credit classes at my school and I got 9 hours of college credit for ~$400

I remember my old neighbor who worked for his wife’s dads company - sure it was all that hard work.

It feels really good to take credit for your success. Some people just get upset at the idea that they didn’t earn it all them selves even though you can look at any data set and see a correlation between family circumstances and the kids.

I think it allows them to look down on people who aren’t successful (guilt free) and blame them for their own lack of success.

https://equitablegrowth.org/how-economic-inequality-affects-childrens-outcomes/

 

[Perryinva]

^^^ Agree. I acknowledge I made tons of costly mistakes so essentially started all over at age 38. But pure luck of RE market timing (sold 3 homes at near peak timing, after dumping a good amount in to improvements for resale) plus having the money at the right time to take advantage of this bull market, made all the difference.