Tony Robbins has been writing investment books lately and on an article on the home page of MSN, he said that young people should not buy a personal home. The simple reasoning he gave for this is that a home to him is not a good investment for them. His feelings is that without income being produced they are only buying a hedge against inflation. Now I know that Mr. Robbins is not against home ownership completely because he has a pretty nice spread as his main home, but I found the advice interesting as well as fitting with my experience with younger California investors who work in the tech sector.
Recently I have had a good number of Millennials who work at Facebook and Google buying investment homes in the Oklahoma City area. Almost all of them don't own a home but they are wanting multiples of investment property. Maybe one compelling reason for not buying is the cost of homes in places like Palo Alto where it is better to rent than to buy, and there philosophy which was different from what I learned growing up in that they would rather have $4 million worth of investment homes instead of one residence. Now this may not apply to areas where affordability is high, but in my 26 years of real estate I have seen younger people buy personal homes when they were far from ready for the responsibility.
When it comes to owning a personal home I should be an indoctrinated robot since I have spent years being in local, state, and national leadership and it is constantly drummed into you that everyone should own a home and it is the American Dream. Unfortunately for some it becomes the American nightmare, and for many after 2006, the worst nightmare. I understand that I am writing this as a real estate investment specialist, but even with that I need at least 90% of a neighborhood to be owner occupied since that is what drives appreciation and also because those people will pay more for a home. Honestly, many pay more because they make irrational decisions, but let's get back to millennials.
If I was working with first time buyers under the age of 34 here is the advice I would give them: Buy your first home as an investment even if you plan to live there. Have someone like me evaluate what the economic value of the property is and don't sell the property when you move, instead rent it. I did this with one of my agents and in fact he also rented out a room to another person so he barely pays for the mortgage. I do think that Tony Robbins is on to something although I wouldn't call it a universal truth. For me any owner-occupant purchase should be evaluated for the investment value of the home and I know that top notch REALTORS® do this if for no other reason because they will one day resell it. I think that sounds a tad cynical but i am old and grouchy at times so let me also say that top notch REALTORS® can also be a caring group. Basically I am saying not only do I agree with Mr. Robbins, I think that I will disagree with the NAR mantra of home ownership for all.