23% of Americans think real estate is the best way to build wealth, but only 12% bought in 2022 (2024)

FAQs

Is buying real estate the best way to build wealth? ›

Investing in real estate can be an excellent way to grow your net worth. Real estate offers an enviable combination of historically strong returns and passive income, as well as the potential to hedge inflation and the gyrations of the stock market.

When asked which steps they took to build their personal wealth in 2022, 27% of Americans said they invested in the stock market. That makes it the most-popular wealth-building move this year, according to the recent CNBC Make It: Your Money survey, conducted in partnership with Momentive.

Housing wealth is about one half of household net worth, and consumption is a considerable fraction (about two thirds) of Gross Domestic Product in the United States.

In 2022, the No. 1 action Americans took to build wealth, stated by 27% of respondents, was investing in the stock market. Just 12% invested in real estate.

If you're looking for a long-term investment, real estate may be the better option. There are no guarantees, but real estate tends to appreciate in value over time. If you're looking for a more passive investment, stocks may be the way to go.

Federal Reserve data indicates that as of Q4 2021, the top 1% of households in the United States held 32.3% of the country's wealth, while the bottom 50% held 2.6%.

Some of the most successful entrepreneurs in the world have built their wealth through real estate. In fact, it's estimated that 90% of all millionaires invest in some form of real estate. There are several reasons for this, but in today's article, we'll share seven reasons why millionaires invest in real estate.

What is the largest source of wealth for Americans? ›

Homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families.

Federal tax benefits

Because of the many tax benefits, real estate investors often end up paying less taxes overall even as they are bringing in more income. This is why many millionaires invest in real estate. Not only does it make you money, but it allows you to keep a lot more of the money you make.

80% of all millionaires made their first million in real estate.

Foreign buyers living in the U.S. made up the lion's share of investors, buying $34.1 billion worth of U.S. homes — or 58% of the volume.

Although stock market returns generally outperform real estate investments by a significant amount over the long run, investors have to pay a price in the form of volatility.

While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circ*mstances, real estate can be an alternative to stocks, offering lower risk, yielding better returns, and providing greater diversification.

Real estate investing can be lucrative, but it's important to understand the risks. Key risks include bad locations, negative cash flows, high vacancies, and problem tenants. Other risks to consider are the lack of liquidity, hidden structural problems, and the unpredictable nature of the real estate market.

What are the 4 key things you need to build wealth? ›

In order to build wealth, families need to have little or no debt, an emergency fund, investable money and confidence in their skills as an investor, according to the report. Note that it's important to prioritize paying off debt and building up an emergency fund first before using leftover money to invest.

You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth. That's how financial advisors typically view wealth.

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

Top 10% income

The average earnings of those in the top 10% were roughly $173,000 in 2020, according to a study by the Economic Policy Institute (EPI).

When our team completed The National Study of Millionaires, we found that 93% of millionaires said they stick to the budgets they create. Ninety-three percent! Getting on a budget is the foundation of any wealth-building plan.

Is real estate or stocks more profitable? Investments in real estate have historically earned 3% to 4% per year on average; contrasted to investments in stock market indexes earning approximately 10% annually over the long-term.

The pyramid shows that: half of the world's net wealth belongs to the top 1%, top 10% of adults hold 85%, while the bottom 90% hold the remaining 15% of the world's total wealth, top 30% of adults hold 97% of the total wealth.

The EPI data says that the yearly wages of the top 1% rose to USD 823,763 in 2020, 7.3% more than what they earned in 2019.

Baby boomers have the highest household net worth of any US generation. Defined by the Federal Reserve as being born between 1946 and 1964 (currently in the ages between 59 and 77), baby boomers are in often in the sunset of their career or early into retirement.

Choose the right career

And one crucial detail to note: Millionaire status doesn't equal a sky-high salary. “Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.”

How much do top 1% realtors make? ›

Each real estate office sets its own standards for top producers, but it's safe to say that a top producer would have to sell at least one home per month to qualify. Top producers earn around $112,610 a year to start, according to the BLS. 1 Mega-stars could earn $500,000 per year and up.

Average Net Worth of an American Family

The average net worth of someone younger than 35 years old is $76,300, as of 2019. From there, average net worth steadily rises within each age bracket. Between 35 to 44, the average net worth is $436,200, while between 45 to 54 that number increases to $833,200.

The richest country in the world is Luxembourg.

The integration of far-flung settlements required new technologies — steam engines, canals and railroads — setting the country on a natural course to industrial development. In sum, slavery and conquest created the foundation upon which the U.S. economy grew.

Millionaire LA homeowners are going out of their way to dramatically drop the prices of some multi-million dollar listings in a bid to avoid a new 'mansion tax. '

The overwhelming majority of millionaires own real estate, making it by far the most popular alternative asset class. That includes their own home, second homes, investment properties, and fractional ownership of investment properties through partners or programs like Arrived Homes and Roofstock One.

With rapid price appreciation between 2020 and 2022, we estimate that approximately 1.2 million California households are now home-equity millionaires. Who are these house-rich Californians? Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear.

Andrew Carnegie, one of the wealthiest entrepreneurs of all time, once said that 90% of all millionaires. become so through owning real estate. And here's why. First of all, real estate is one of the best hedges against inflation.

1. Donald Bren. Donald Bren began his career as a typical real estate agent, making his first investment in a real estate company that purchased over 90,000 acres of land.

Key Takeaways. Real estate investors make money through rental income, appreciation, and profits generated by business activities that depend on the property. The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage.

How much real estate does the Mormon Church own? ›

California records show the church owns $67 million in commercial properties, including $15 million in apartment buildings in Stockton and Glendale, a $10.6 million office building in Anaheim and a $4.5 million retail development in Fresno County.

Across America, subsidiaries of the church reportedly hold 1m acres of agricultural land. This is thought to include land in Nebraska, Oklahoma, Utah and Texas. Church companies are also thought to hold land outside the US, including in Canada and Brazil.

Chinese investors are among the top foreign purchasers of residential real estate, along with Canadians, according to the National Association of Realtors. Other states have had concerns over foreign ownership of land and have made efforts to regulate it.

By 2019 and 2020, Chinese buyers made up only 11% of the total foreign investment in the U.S., according to the NAR.

“90% of all millionaires become so through owning real estate.” This famous quote from Andrew Carnegie, one of the wealthiest entrepreneurs of all time, is just as relevant today as it was more than a century ago. Some of the most successful entrepreneurs in the world have built their wealth through real estate.

Becoming a millionaire from real estate investing isn't as far-fetched as it may seem, but it's not an easy goal to reach. You shouldn't expect it to happen overnight, but it is achievable. If you have the right knowledge, develop a plan, and be persistent enough, you can become a millionaire real estate investor.

Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear. Statewide, there has been a dramatic rise in the number of Californians who have paid off their mortgages, from 1.6 million households in 2000 to 2.4 million in 2020.

Do most millionaires inherit? ›

Dave Ramsey, personal finance expert and founder of Ramsey Solutions, says this myth of primarily inherited riches is “flat wrong.” When Ramsey's National Study of Millionaires asked where the riches came from, they found that a whopping 79% didn't receive any inheritance from parents or other family members.

It's Robert Kiyosaki's position that “It is our educational system that causes the gap between the rich and everyone else.” He laid the foundation for many of his messages in the international best-seller Rich Dad Poor Dad — the #1 Personal Finance book of all time — and in Why the Rich Are Getting Richer, he makes his ...

While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circ*mstances, real estate can be an alternative to stocks, offering lower risk, yielding better returns, and providing greater diversification.

To become a real estate millionaire, you may have to own at least ten properties. If this is your goal, you need to accumulate rental properties with a total value of at least a million.

Commercial real estate is known to yield higher returns than residential real estate. If you can afford to manage a commercial space, it can prove lucrative over time, depending on your area.

Only 3% of American millionaires received an inheritance of $1 million or above. Real estate makes up about 40% of a typical millionaire's net worth.

The main source of that income comes from commissions on real estate sales. If you're buying a home, it's important to understand how any agents you work with earn their commission.

Wealthy people can opt to get affordable loans at a low rate, take a tax deduction that helps subsidize their interest, pay back their loans with "cheaper" money due to inflation, and use the cash they might otherwise have put down on a house to make an investment that stands a good chance of earning a higher return.