Generational Wealth although a very popular topic is very seldom achieved in the Black community.
Home Equity is the home’s current market value minus any debts on the property. The equity in your home is built year over year as similar homes in your neighborhood sell, the value of your home will change. I would even say that home equity should be a determining factor when buying a home.
Real estate is one of the pillars to wealth. It is an asset that appreciates over time and that appreciation minus any debts on the home is attached to the home and not the owner. So when the asset (your home) is passed down from one generation to the next, the home equity is now theirs. Real estate is usually one of the largest assets the average person will own. Such a large asset appreciating over time typically results in huge profits. Those profits, if used correctly, can positively impact the next generation’s wealth. Generational wealth is valuable assets (assets- liabilities) successfully transferred from one generation to the next.
“Past policies, laws, and regulations prevented many Black Americans from homeownership, depriving generations of accumulating wealth. But today, homeownership can be an effective way for your family to grow its generational wealth.” https://3by30.org/homeownership-101/benefits-of-homeownership/
“You might expect that the ratio of black to white household wealth would be similar. But median white household wealth (assets minus liabilities) is about $134,000, while median black household wealth is about $11,000 - less than 10 percent as much. Not all of this enormous difference is attributable to the government’s racial housing policy, but a good portion of it certainly is. Equity that families have in their homes is the main source of wealth for wealth for middle-class Americans.” “The Color Of Law: A forgotten History of How Our Government Segregated America” By Richard Rothstein
Rent has historically gone up year after year. Inheriting a home has the potential to cut your living expenses drastically, while increasing your net worth.
The current lack of supply and huge demand for real estate has positively affected the home equity most homeowners have! Why? When there is a lack of supply and a huge demand the value of the product (Real estate) goes up. This is why we have seen home values stay steady even as interest rates have hit 20 year high’s.
“The best time to plant a tree was 10 years ago, the next best time to plant a tree is today” -Unknown. If you are paying attention to the current market and how home values have NOT plunged, nor has the real estate market Crashed, I think that is a testament to how real estate is a solid investment if done correctly. Waiting for interest rates to drop is preventing you from building equity you could have been building, putting you back into a bidding war environment, and risking home prices increases.
I know that the best way to successfully transfer real estate from one generation to the next is through Trusts. Please consult with an estate attorney to discuss which Trust is best for your situation.
Protecting your assets is extremely important when planning for generational wealth. A Will alone is not enough, as your family may still have to go through probate court which is not only time consuming it is expensive as well. Ultimately cutting into the profits from the estate.
Buy Real Estate and Hold! I stand by that motto. It is always a good idea to buy real estate, because there are deals in every market and people are always buying real estate in every market.
I truly want this conversation to start early in minority communities as we have been left out of these conversations for hundreds of years! I am so grateful to be born in the information era where I can change my own life with a simple google search or YouTube video. Most millionaires in America own real estate, the hedge funds own real estate, follow the greats if you desire to change your current reality.