Real estate agents reveal more uber-rich Americans are renting instead of buying homes.
In New York, rentals of $10,000 to $100,000 are on the rise, according to the New York Times. The luxury market there has been the slowest to recover from the housing market collapse. Brokers told the paper it appeared buying was not a “sound investment” to wealthy New Yorkers at this time, and it’s likely they didn’t want to put, “35 percent down on an apartment when its resale value still comes with a big questionable market.”
The upsurge in luxury renting is boosting profits for companies, such as Corporate Mansions. Owner Bill Lyons’ business multiplied from the distressed properties and vacant homes near the Las Vegas Strip in Nevada’s ritziest neighborhoods. Lyons’ business rents luxury properties to wealthy executives and A-list celebrity clientele for thousands of dollars per week. He and his team arranged deals with banks for homes and then resurrected the property, he told the Las Vegas Business Press. Lyons added that he hopes to sell the homes, but he’s waiting and creating a revenue model that will work until the market picks up.
Affluent Americans are living more modestly and are looking for more value for their dollar. Six figure income-earners even led the “coupon enthusiast” frenzy during the recession. “In fact, more affluent households dominate coupon usage: 38% of “super heavy” users and 41% of “enthusiasts” come from households with incomes greater than $70,000,” according to The Nielsen Company’s Nielsen Wire blog entitled, “The Coupon Comeback.” “Households with income of $100,000 and up were the primary drivers of coupon growth in 2009,” it said. The wealthy Americans, American Express found, have also been gulping down more fast food.
Many of these Americans experienced a rapid decline in their fortunes during the recession. Increased investments in stock and real estate prior to the economic decline were among the culprits. These acquisitions exposed them to the nasty fluctuations in the overall market. Many found the financial shock a cathartic experience. They learned that their financial reserve was not as secure as they once thought.
The economic recovery is enabling affluent Americans to grow their wealth the same way they lost it, Jonathan Parker, a professor of consumer finance at Northwestern University told The Street. Towards the end of 2010 the luxury goods market saw more activity as the wealthy incurred more frequent first-class flights and stayed at high-end hotels.
Do you think it is better to rent or own a home? Why?
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