“Take a cue from the rich,” advises the July, 2012 issue of Money magazine, and “practice patience” when it comes to homeownership. According to Money, millionaires tend to live in their homes for over 20 years. (They also tend to hold their stocks for long periods of time, not to mention their spouses; 96% don’t divorce or separate.)
How does that 20+ years in a home compare with the average length of time spent by the rest of the U.S. populace? Hard to say. (Money doesn’t even try.) According to an analysis of 2007 U.S. Census figures by Paul Emrath, Ph.D., of HousingEconomics.com (published here on the NAHB website), there’s a mix of homeowner types: The people who tend to move every few years and the ones who stay put for a while. Averaging these out doesn’t really provide an accurate picture of anyone at all — though one can say that the biggest group of homeowners stays in their home for up to 19 years, which is less than reported for the aforementioned millionaires.
So, assuming it is true that millionaires stay in their homes for an appreciably longer time than the 99% does, the question becomes: Is this actually helping them achieve millionaire status? Or is something else at work in creating this statistic?
The first thought that came to my mind was that perhaps a millionaire’s “starter home” is so much bigger and better than what you or I could afford that there’s simply no incentive to move. They can sit back in their poolside cabana and relax for a few decades. But no, Money supplies a surprising statistic here: Three times more millionaires live in homes worth less than $300,000 than in homes worth at least $1 million. (I guess you don’t become or remain a millionaire by spending all your money.)
Money also points out that by staying in one place, “You don’t lose money to transaction costs and you ride out market slumps . . . .”
I still question whether there’s a lesson in there for the rest of us, however. For instance, a lot of millionaires aren’t relying on day jobs for income, but on their investments; in which case, they have no need to, say, move to a new city in order to take advantage of a lucrative job offer. Worries about transaction costs and missing the boat to millionaire-dom certainly shouldn’t stop someone who DOES need to advance in their career from moving. And if I’m right that many millionaires don’t have to worry about commuting, maybe the houses they’re buying are sometimes cheaper because they’re located in remote rural locations.
Just in case, however, I’m planning to stay in my house for a good long time and wait for the millions to roll in.