Friday, August 10, 2007

Buyers of million dollar homes

You probably thought I was crazy when I announced in a previous post that one of my goals were to buy a house in California out-right. Okay, yes, it might sound like a crazy goal (that I may never achieve) but I'm in good company. Did you know that 32% of "million-dollar" home buyers did not have outstanding mortgages? A survey by the US Census said that just under one-third (32%) of million dollar home buyers bought their homes paying cold-hard cash!

Can you tell that I'm very proud of myself?

Yes, indeed, I may not have the resources to meet my goal today . . . but my mind and my goals are in the right spot. Hey guys, I think like a millionaire!

Here is what I found out about the typical million-dollar home buyer . . .

1. That the author's of The Millionaire Next Door were right and I just have to concede to increase "my game" where income is concerned - see my post "Millionaire Next Door's Advice to Buying a Home." Because the average income of those who own million-dollar houses in 2001 was $900,000 in household income (according to 2001 SCF data).

So basically, typical millionaires pay slightly below two times their annual income for their home and if I want to establish my millionaire-mind, I must think along those lines. Either look at properties that are two times my household income in a serious light or bring up my income to accommodate what I think I should have in a home. A hard concept to swallow, but one I must face.

2. That 17% of million-dollar home buyers paid 50% or more up front (the majority of luxury home buyers pay 25-30% down payment as a customary practice.) So in this scenario a buyer wishing to purchase a million dollar home would pay $250,000. So, all these people with no down-payment or low-down-payment are not being millionaire-minded (oh-oh).

3. The two biggest groups who bought million-dollar houses were entrepreneurs and corporate executives. So if I wish to reach my goal of buying a house out-right (I'm not looking in the million-dollar range by the way - $750,000 will do just find thanks), then my ideas of entrepreneurial-ship are exactly the correct path to take.

4. The survey indicated that only 6% actually paid over the asking price. See that? Millionaires are not suckers. The last few years of people buying over the asking price just didn't feel "right" to me. It's nice to know that it didn't seem right to people with globs of money either.

5. Sixty-six percent (66%) of million dollar home buyers are between 35 and 55 (where the majority of 35-45 inherited some of the money to purchase the home). While 28% of million dollar home buyers were 56+ in age. So, for all you 35 and under . . . you still have some time, get to work!

I better get to work too. I only have 2 years and 300 days to achieve my goal.

Information found at:
Joint Center for Housing Studies - Harvard University
"Million-Dollar" Homes and Wealth in the US (.pdf file)Zhu Xiao Di. - January 2004

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