In America, most adults assume they’ll receive large assets such as property or money from older generations. But is this the only way to build generational wealth? And is it the best way?
The Best Way to Build Generational Wealth
More than 60% of adults in the United States are confident that they’ll receive property, investments, or other high-value possessions from older generations, according to a survey by OnePoll on behalf of HomeLight. Out of the 2,000 responders studied, 74% said they were among those lucky enough to have already built generational wealth.
In the study, 83% of people who still lived with their families and 75% of renters said they’ve built generational wealth, even without owning a home. Meanwhile, just 72% of homeowners said the same was true for them. Yet, owning property is still the most common method.
Even those who don’t currently own a home anticipate using a property to build generational wealth. Around 77% of people that currently live with their family plan to inherit the home. Among millennials, 64% plan to inherit a home. Surprisingly enough, the Northeast and Western U.S. — which have the lowest homeownership rates in the country — are the areas that boast the largest percentage of individuals who say they’ll own a home in the future.
To Sell or Not to Sell
Homeowners are largely focused on property being their main generational wealth-generating tool. Out of the homeowners studied, 26% were renovating or improving their home to increase its value and 38% were subletting a part of the house or apartment to increase income.
“Despite changes in the market, homeownership continues to be one of the most surefire ways to build generational wealth in the U.S. Home equity surged to a record $27.8 trillion in Q1, but rising interest rates and costs of living have started to curb demand for home buying,” said President of HomeLight Homes, Vanessa Famulener. “Those who have built up equity in their homes can take advantage of numerous tax, repayment, and interest rate benefits that home equity lending offers homeowners —especially to help bring costs down for value-add home improvements.”
Yet, 34% of homeowners in the U.S. want to sell their current home. Only 20% decide to keep their property and gift it to their kids. Sadly, only 45% of homeowners feel confident that they’ll be able to sell their houses at the best value. This may be because, despite homes selling for more in the past few years, not all Americans have a thorough understanding of realty and the current market. While 60% of millennials say they have a confident grasp on the housing market, only 49% of baby boomers agree.
In addition to home ownership, the HomeLight survey also explored other ways of generational wealth building, such as investing in education, business, or stocks. Those who aren’t able to or don’t want to focus on co-owning, renting out, or subletting can also enroll in a savings or investing program — 31% of Americans decided to do the same. Additionally, 29% of U.S. residents invest in or sell stocks and bonds and 28% have started or plan to start a business to accrue generational wealth.