Navigating the New Economic Realities: From Homeownership to Wealth Building
4 min read
These days, it’s hard not to feel the squeeze. The rising living costs can make it seem like everything just sucks as expenses continue to climb. Could you tell me why home and car insure have shot up last few years? Meanwhile, big tech keeps accumulating power and influence, all while chipping away at our privacy. And there’s the wildfire of misinformation, making it a daily battle to figure out who or what news source to trust. The manipulation game is on and the agendas are never easy to gauge. These are just a few of the economic realities we now have to face.
Sure, we can say things are objectively better today than in the '90s or really at any point in the past. Today, we do have better education, better technology, better healthcare, less crime, etc. But as Chris Rock joked in one of his comedy specials, 'If I invade a Kentucky Fried Chicken, wings will be cheap at my house!' So if we do have greater resources and things are 'better,' why doesn’t it feel that way? Why has quality become harder to find? The answer to these questions may need a separate post, as the improvements we’ve seen are nuanced and bring their own issues. Therefore, instead of getting bogged down by these and the numerous others challenges, maybe it’s time to focus on how we can navigate them.
Homeownership. Whether you’re feeling priced out or overwhelmed by the ever-changing financial landscape, there are still ways to build wealth and secure your future. By thinking creatively and staying open, you can turn challenges into opportunities.
In today’s economic climate, the path to homeownership, traditionally a cornerstone of wealth-building, has become increasingly challenging. With average home prices in Massachusetts and New Hampshire soaring to $650,000 and $487,000, many potential buyers feel priced out. However, by partnering with trusted acquaintances, the dream of homeownership and its financial benefits can still be within reach.
Have you considered pooling resources with two or three like-minded friends to purchase a multifamily home? These properties, often at the higher end of the price range, offer a unique opportunity to enter the market and build equity together. Even with $50,000 individual incomes, you can collectively afford a property that's otherwise out of reach.
While living with roommates might not be the idyllic image of homeownership, it’s a practical step toward financial stability. This economic situation is temporary; it's not if, but when the Fed will cut rates. So by planning for a 2-3 year period of shared ownership, you can position yourselves to thrive as the market stabilizes and your equity grows.
Did you know that just two weeks ago Gov. Maura Healey signed into law the new housing bond bill? It’s supposed to be the first step toward tackling the local housing affordability crisis. One of the items on the bill is that Homeowners can now build accessory dwelling units — aka granny flats or in-law suites — of up to 900 square feet on their property. This is a smart way to improve your cash flow.
As the economic landscape evolves, traditional paths to wealth-building are being supplemented by alternative strategies. One increasingly popular method is diversifying investment portfolios across a variety of asset classes—stocks, bonds, real estate, and commodities. This helps reduce risk and enhance long-term gains, especially in uncertain times. Note that in times of a recession, low volatility stocks tend to outperform the high volatility investments in part by losing less during the downturn.
Digital assets like cryptocurrencies have also gained traction as a new frontier in wealth-building. While speculative and volatile, they offer the allure of high returns and have captured the attention of younger investors. It’s crucial to approach digital assets as a smaller, speculative part of a diversified strategy.
These alternative strategies present new challenges, like high barriers to entry for first-time homebuyers and risks in overheated markets. Investors must stay informed, seek professional advice, and be ready to adjust strategies as conditions change.
Reassessing your financial goals and brainstorming practical strategies in light of these new economic realities is essential. While homeownership remains valuable, it's no longer the only path to wealth-building. At BMG we believe that the key to finding balance with your life goals is to realize which aspects of it you need to focus and be smart about. This is how you can compensate for the days you’re not at your best. Set yourself up for long-term financial success by partnering with us to sharpen your focus and thrive in an increasingly dynamic and uncertain financial world.
