Here’s an interesting statistic: Market observers including Deloitte and Oxford Economics estimate that there are ~10.5 million households in the United States that have a net worth of $1 million or more. (The number is calculated including the primary home.)
I for one was a bit surprised by the number, figuring it might be higher.
But here’s another interesting number – and one that explains a lot: There were ~12.7 million such “millionaire households” in America back in 2006.
The difference? Housing property values, of course. They’ve declined by ~15% since 2006 … which makes it little surprise that the number of millionaire households in the country has dropped by a similar percentage.
Over past several years we’ve witnessed millions of homeowners become upside down in their home mortgages. For this reason alone, it would be nice if more people’s net worth wasn’t so tied up in houses.
It’s as if we’re all farmers, the ultimate “land poor” demographic group.
Many people have an aversion to other types of investment, pointing to a stock market that has seen little net upward movement over the past decade. Others simply prefer a solid asset like owning property – or maybe gold.
But if the past few years have taught us anything, it’s that home ownership isn’t always the road to financial well-being.
In fact, real estate specialist and Wall Street Journal editor David Crook wrote an article recently (“Why Your Home Isn’t the Investment You Think It Is“) which spells out a pretty convincing argument that home ownership doesn’t work as the best investment vehicle.
And that’s not just by looking over the past few years … but over the past several decades.
It’s a thought-provoking article that’s well worth a read.