When I read this headline in the LA Times Real Estate section two weeks ago, my mind instantly pictured a 24 year old college drop out who made millions from the Facebook IPO or a kid who worked for the family farm in the middle of Iowa or Illinois and bought a little house next door for $40,000.
But no, this article wasn't a tale of boot strapping or highly entrepreneurial young kids who were ahead of the curve, mature beyond their years who paid down their mortgage debt quickly.
It was an article, referencing a Zillow study, about adult children who's wealthy parents chose to put a portion of their investment portfolio into a free and clear home at the bottom of the market for their kids rather than endure the treachery of another 40% drop in the stock market like many experienced in the 2008-2009 period.
"Ed Kaminsky, a real estate agent with Shorewood Realtors in Manhattan Beach, concurred, saying that he has done more cash deals in the last 24 months than during the first 24 years of his real estate career. A good chunk of the buyers are young and wealthy home shoppers who are either the recipients of trust funds or are getting help from their parents, he said.
"Those parents, and young buyers, are motivated to buy as prices have sunk and real estate has reemerged as a secure investment, he said.
“People feel that cash is safe in real estate and maybe not safe in the stock market or even sitting in a bank,” Kaminsky said.
More power to these young adults who were fortunate enough to have some help buying their first house. It sure beats juggling the debt burden so many recent college grads face on their entry level pay that supports rent, car payments, student loan payments, and rising credit card debt that was accumulated buying new clothes for work, late night drinking, and cross country trips to attend the weddings of college friends.
If parents have the means to lessen the financial obstacles college grads face, great! The less debt accumulated in our society, the better. Freedom from debt gives people the chance to take risks, move to different parts of the world, and pursue more fulfilling career opportunities rather than get caught in the debt trap that unfortunately, the American economy thrives on.