Real estate brokers say millennials are buying homes – and expensive homes – like never before thanks to wealthy parents and the tech boom, Wall Street Journal’s Lauren Schuker Blum reports. The younger generation also thinks houses are a safer investment than the stock market.
“In the last two months, half the folks I sold homes to were young entrepreneurial types—and they were all buying homes for over a million dollars,” Washington D.C.’s Michael Rankin of TTR Sotheby’s International Realty tells WSJ. He says those kinds of buyers didn’t exist a few years ago.
Rankin and other real estate professionals are seeing more clients skipping starter homes and condos altogether for sprawling houses. The tech boom is largely to thanks. “Brokers say many of the young buyers today have made money during the IPOs of technology companies such as Facebook, Google, LinkedIn, or they have profited by starting their own companies,” Blum writes. She cites one Facebook employee who moved from a rented 800-square-foot apartment to a $7 million 9,000 square-foot-home. A former Facebooker Rick Armbruso, who is now 33, purchased a 1.2 million 2,000-square foot home 2.5 years ago.
For those who aren’t independently wealthy, parents are stepping up to the plate. A luxury broker in Los Angeles tells WSJ she’s seen “more parents buy home for their children in the last year than in [her] whole career.”
The reason: There’s a generation of wealth that didn’t exist before in America. Baby Boomers made more money as a whole than their parents.
“For the first time since the pre-Depression, Gatsby era, we have a generation of kids whose parents made a great deal of money and are giving a great deal of it to their children,” Harrson Group’s Jim Taylor tells WSJ. He recently conducted a study about wealth in America with American Express Publishing. “Prior to this, very few families had money through inheritance. There is a living wealth transfer currently taking place that this country hasn’t seen in decades.”
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