If you know anyone who’s tried buying or selling a house this year, you know the housing market is red hot. As in, the hottest it’s been since 2006, with low mortgage rates—and a limited number of homes on the market—sparking bidding wars and overwhelming real estate agents with requests to tour literally anything that’s for sale (like one house in Canada, which booked 192 showings in 24 hours, despite looking like a “small box”).
As home values climb, we’re all left wondering: Is now a good time to buy a house? A whopping 73 percent of Americans say it’s a smart investment, according to an 850-person Opendoor survey. But it turns out that what type of home you buy—and whether you’re better off investing elsewhere until the market cools—varies greatly from generation to generation, particularly when it comes to millennials and baby boomers. Here’s where their perspectives differ.
If You’re Buying a House, Invest in…
Millennials Say: A move-in ready home
Baby Boomers Say: Renovating a fixer upper
Millennials are the largest group of first-time homebuyers, so it makes sense that they’d be more inclined to, uh, ease into the joys of home ownership (like the first plumbing repair or roof leak). Plus, budgeting for renovations requires more cash in hand—something that may not be as readily available for millennials. (TD Bank’s Student Debt in the USA Survey found that 41 percent of Americans who graduated within the past 20 years have delayed buying a home due to student loan debt.)
Conversely, if you already own a home—as many boomers do—you may be more inclined to sell it for top dollar, then use that money to buy and fix up a house that needs a little TLC. This dovetails with another Opendoor survey, which found that boomers were the age range most concerned about overpaying for a house right now.
The bottom line: If you’re thinking about buying a house right now—be it move-in ready or a fixer upper—with the intent of flipping it for a huge profit, you may want to think twice. Some experts worry that skyrocketing home values will start to stall out, as the prices get too high for first-time and move-up buyers. (That doesn’t mean we’re headed toward another housing bubble; stricter loan standards and the improving job market make it unlikely, says Mark Zandi, chief economist at Moody’s Analytics.)
If You’re Not Ready to Buy, Invest in…
Millennials Say: Cryptocurrency
Baby Boomers Say: Your retirement account (or fixing up your current house)
Buying a house isn’t the only way to build wealth, of course, and when asked to identify the best investment right now, 27 percent of baby boomers said putting money into a retirement account. (For context, 18 percent said buying a fixer upper.) The top response was followed closely by fixing up one’s current home (26 percent), which mirrors Opendoor’s overall finding that boomers weren’t quite as convinced as Gen X and millennials that the housing market would remain as strong as it is over the next year.
While cryptocurrency—a digital form of money where transactions are recorded and verified using a decentralized system—is one way you could save for retirement, it wasn’t what boomers had in mind; only 3 percent considered it the best investment option. For millennials, however, it was the second most popular investment option, just a hair behind buying a move-in ready home (20 vs. 21 percent, respectively).
This difference in opinion could have a lot to do with where each generation is in their lives, and how much risk they’re willing to assume. Given that Bitcoin, the household name of cryptocurrencies, has only been around since 2009, it’s hard to gauge how it will fare long-term. As a result, The Motley Fool recommends pretty classic investing advice: If you’re looking for the relatively “safer” bet, invest in a variety of stocks (and yes, perhaps crypto), then shift to bonds as you get closer to retirement.