House Rich, Cash Poor 🤑 - InvestingChannel

House Rich, Cash Poor 🤑

Proprietary Data Insights

Top Financial Pro Tech Stock Searches This Month

Rank Ticker Name Searches
#1 NVDA Nvidia 395
#2 AAPL Apple 333
#3 AMD Advanced Micro Devices 176
#4 AMZN 103
#5 MSFT Microsoft 97
#ad A.I. is a Tidal Wave – Here’s What to Buy

House Rich, Cash Poor 🤑

Over the weekend, The Juice took our crew to see Bruce Springsteen at The Forum in Los Angeles. Inglewood, actually. 

The Forum, which is the former home of the Lakers and Clippers, now gets most of the area’s big concerts. Right next door is SoFi Stadium, where the Rams play and big acts — most recently, Taylor Swift — command top dollar and sell out show after show after show

The area between these two venues and Downtown Los Angeles is known as South LA. It used to be called “South Central.” However, in 2003, the city changed the name to South LA because South Central had become synonymous with everything from gang activity to poverty to general blight. 

They might need to change the name again

South LA has never been worse. It’s shocking, actually. 

The conditions in South LA are so bad you instantly wonder how the richest nation in the world and a city with some of the wealthiest people in the world can allow it to persist. Sadly, this thought has become common, if not cliche. 

You have people doing so well they can afford to fill arenas and stadiums night after night, dropping $20 for one beer, and others who live in literal squalor. 

No matter your politics, we can all agree that something needs to be done at the same time as wondering if things are so far gone that nothing can be done. Sad truth be told, unless you’re forced to drive though it, it’s easy to forget that places such as South Central even exist. Out of sight, out of mind. 

This juxtaposition makes you wonder if a middle class still exists in America.

As The Juice thinks about, we think one does. 

With this tough-to-reconcile backdrop, we consider the iteration of the haves and haves not economy most of us tend to think about more frequently. 

The one between the apparently dwindling middle class and the incredibly well off, if not wealthy or flatout rich. The middle class who can afford a $250, but not $1,500 Springsteen ticket (or the equivalent) a few times a year relative to the upper echelon who make it (or the equivalent) routine without their bank account feeling a thing. 

The middle class that still exists in America splurges from time to time. 

The lives of the upper echelon looks like one big, neverending splurge. 

There’s no better place to illustrate this divide between the privileged and the super privileged than the housing market

Consider some data: 

  • According to housing researcher Point2, “The number of households that earn at least $1 million more than quadrupled between 2017 and 2022.”
  • “The “typical” millionaire homeowner is a 50-year-old chief executive or physician who lives in San Francisco or New York, owns a $1.8-million, 10-room, five-bedroom home and has three cars.”

As we take in these numbers of high-earning millionaires, we also think about the folks we write about often in The Juice. Those homeowners with ultra-low mortgage interest rates — or no house payment at all — who have net worths of $1 million or more thanks, in large part, to their favorable housing situations amid the rapid increase in the value of real estate. 

Property prices that have increased way faster than average incomes.  

Because on the other side of this privileged coin, you have statistics like these, via Redfin:

  • 49.9% of homeowners and renters “regularly or greatly struggle to afford their housing payments.” 
  • 22% have skipped meals and nearly 21% have sold some possessions to make rent or the mortgage. 
  • Almost 18% have borrowed cash from friends and family or tapped retirement money to cover their housing expense. 

From here, you can break things down into two general groups. And, for the sake of illustration, we are generalizing. Even though we do think lots of folks fall into these two categories. 

How many homeowners with $1 million net worths are house rich, cash poor? In that, they’re sitting on wealth they just so happen to live in. But they can’t necessarily spend freely like folks who are cash rich. To tap their wealth, they need to take out a loan using their home as collateral or sell, downsize (maybe considerably) and take their profits to fund a potentially upgraded day-to-day life in a small house. 

Of the folks struggling, it can be tough to conjure a way out other than making more money and reducing overall cost of living any way you can. These people, many of whom are Gen X or older millennials, likely serve as a cautionary tale for younger millennials and Gen Z. 

Younger people must look at the Gen X/older millennial struggle and think, I want no part of that. So, they’re the ones living hand-to-mouth. Making good money, but saving very little because they see their chances of becoming homeowners as slim. So they’re going to spend their cash on experiences, such as travel and eating out (the things their older, struggling counterparts must forgo in order to pay for housing), to soothe themselves through this housing and general cost of living crisis. 

Please use the feedback link at the bottom of this page to let us know: Does The Juice at least sort of have this all figured out? 


The Bottom Line: One thing we’re absolutely certain of is that housing is often the determinant for the ability to have a good life where you can spend freely, but within reason. If you’re middle class, job number one is to find a way to not spend so much of your income on housing that you have cash left over to do other stuff. Not only for spending, but for saving.

It’s an incredibly difficult nut to crack. One we’ll continue to explore throughout 2024 as we continue connecting the dots at the intersection of the housing and retirement crisis. 

Speaking of retirement, if you missed Tuesday’s Juice, here’s a link to it. We put together a useful library of resources on retirement investing, ETF investing and portfolio diversification you can use to help construct a plan you can adapt to your situation.

Want to get content like this directly to your inbox?
Then we urge you to sign up for our newsletter here

Related posts

Carl Icahn Increases His Stake In Take-Two Interactive To 10.68%


iPad Mini Display Outperformed By Kindle Fire HD & Nexus 7


Foxconn Might Open Manufacturing Plants In The U.S. [REPORT]


Peter Cundill Protégé Tim McElvaine on Investing in Japan [VIDEO]


Set Bing Home Page Image As Lock Screen In Windows 8


Morning Market News: JCP, APO, MCHP, ZIP, ENR, LGF, EA, ATVI, COV, LNT