The Corporate Threat to Generational Wealth
Generational wealth through homeownership is like inheriting a financial head start. Imagine your family home appreciating in value, providing you with a place to live rent-free or funds for your future. But with companies buying up starter homes, it's getting harder for first-time buyers to even enter the market. This raises concerns about the future of generational wealth and whether homeownership will remain accessible. These companies often have an advantage due to financial practices that favor them, making it tougher for everyday buyers to compete.
Starter Homes: Out of Reach for First-Time Buyers
It's becoming increasingly difficult for first-time homebuyers to compete in today's market. Why? Because companies are increasingly buying up starter homes, viewing them as profitable investments with steady rental income and long-term value appreciation.
According to Redfin, real estate investors bought 26.1% of low-priced homes in the U.S. in the last quarter of 2024, the highest percentage ever.
With their deep pockets and access to better loan terms, these companies can easily outbid individual buyers, further squeezing an already tight housing market.
This trend has serious consequences. As companies purchase more and more homes, the supply of affordable options dwindles, and prices continue to climb. This makes it particularly challenging for younger generations to achieve the dream of homeownership. In fact, according to the National Association of Realtors, the median age for first-time homebuyers in 2024 was 38, up from 29 in 1981.
Source: National Association of Realtors
Homeownership Under Attack
"As the housing market becomes more inaccessible, the dream of home ownership—and the associated benefits of financial stability and wealth accumulation—becomes out of reach for many."
Companies buying up houses are changing the rules of the housing market. It's not just about individuals competing with each other anymore. These companies are shrinking the supply of homes for sale, which naturally drives up prices and makes it much harder for regular people to buy, especially those trying to get their foot in the door for the first time.
But it's not just about buying. These companies are also buying up a ton of rental properties, giving them the power to control rents and push those prices higher too. This double whammy makes it incredibly tough for individuals and families, squeezing their budgets and making the dream of homeownership feel impossible.
It's a problem that goes beyond just buying a house. This trend is impacting the whole economy, making it harder for people to get ahead and build financial stability.
Homeownership Isn't the Only Path to Building Wealth
While homeownership has traditionally been a key part of building wealth, it's not the only path. Diversifying your investments across different asset classes like stocks, bonds, and fractional real estate can help you manage risk and grow your wealth over time.Not ready or able to buy a home yet? Consider exploring options like:
- Real estate investment trusts (REITs) - Buying REITs in the public stock market allows you to still participate in the upside of the real estate sector. These allow you to earn income from rents, property sales and dividends while others do the actual property management.
- Private Market Investment Platforms - There are companies that lend money to community real estate projects and then invite investors to participate in the investments. One such opportunity is through Worthy Bonds which are bonds that earn a 7% fixed return and support development of residential real estate projects like affordable homes for first-time homebuyers.
Remember, a well-diversified portfolio is essential for long-term financial stability and building generational wealth.. even when it is a challenging environment in which to purchase a primary residence.
