According to the National Association of Realtors, the average age of first-time homebuyers is 36 years old, which means that the millennial generation—generally regarded as individuals born between 1981 and 1996—has reached the stage in their lives where buying a home is often a top priority. Yet recently, the cost of homeownership has skyrocketed in large part due to an adverse combination of high interest rates and scarce inventory, leaving millennials with a daunting homeownership outlook.
This difficult homebuying landscape has resulted in a dramatic shift in mortgage originations. Prior to the COVID-19 pandemic, U.S. mortgage originations were already on the rise—climbing from $344 billion in Q1 2019 to a 14-year high of nearly $752 billion in Q4 2019. After a brief dip due to pandemic-era stay-at-home orders and social distancing, originated mortgage volume skyrocketed to a new high of over $1.2 trillion in Q2 2021. This abrupt growth is mostly attributed to historically low interest rates, low inventory, and an increased desire for more space amid the pandemic, but these conditions were short-lived. Rapidly rising interest rates combined with other forces, such as return-to-office mandates, have brought mortgage originations down to under $324 billion in Q1 2023, the lowest it has been in nearly nine years.
In order to cope with rising prices, millennials are taking out larger home loans. In 2022, the median loan amount for mortgages taken out by applicants age 25–34 was $315,000, and $365,000 for applicants age 35–44, higher than any other age group. Similarly, the loan-to-value ratio—or the amount of the mortgage compared to the sale price of the home—was 88% for 25- to 34-year-olds and 80% for 35- to 44-year-olds. Inherently, many millennials are first-time homebuyers and typically have less existing home equity to apply to new mortgages. Additionally, millennials are at the stage of their lives where they may be supporting a growing family and require more living space compared to older generations.
Despite the overall decline in homebuying across the country, millennials still account for the majority of home purchase loans in 2022. However, millennial home purchasing varies by location. Millennials in northeastern states account for the largest share of home purchase loans, with Massachusetts (64.5%), New York (63.8%), and New Jersey (63.0%) leading the country. Midwestern states such as Minnesota (62.9%), Illinois (62.6%), and North Dakota (62.4%) also rank among the top 10 states for millennial homebuying. On the other end of the spectrum, Delaware (41.1%), Florida (45.2%), and South Carolina (46.9%) have the lowest share of home purchase loans taken out by millennials and notably have older populations.
To determine the locations where millennials are buying homes, researchers at Construction Coverage, a website that provides construction insurance guides, analyzed the latest data from the Federal Financial Institutions Examination Council. The researchers ranked states according to the millennial share of conventional home purchase loans originated in 2022. For the purpose of this analysis, millennials were considered to be those age 25–44 in the year 2022. In the event of a tie, the location with the greater total number of millennial home purchase loans was ranked higher.
The analysis found that millennials took out 57.4% of home purchase loans in South Dakota last year, with a median loan amount of $275,000. Here is a summary of the data for South Dakota:
Millennial share of home purchase loans: 57.4%
Total millennial home purchase loans: 4,193
Median loan amount: $275,000
Median loan-to-value ratio: 83.8%
Median interest rate: 5.00%
For reference, here are the statistics for the entire United States:
Millennial share of home purchase loans: 57.8%
Total millennial home purchase loans: 1,669,539
Median loan amount: $335,000
Median loan-to-value ratio: 83.1%
Median interest rate: 4.99%
For more information, a detailed methodology, and complete results, see Where Are Millennials Buying Homes in the U.S.? on Construction Coverage.
From the Beatles’ iconic rooftop performance to Lady Gaga’s outrageous ensembles, live music concerts are an unstoppable force. Whether you’re a die-hard fan or only an occasional concertgoer, everyone has their own opinion when it comes to deciding whose show was the most impressive—but who’s really served up the best concerts of all time?
We’re here with a definitive list of the Top 10 Best Concerts Ever—so get ready to rock out and find out who made our list!
1. Jimi Hendrix at Winterland Auditorium
One user posted, “Jimi Hendrix, John Mayall, and Albert King at the Winterland Auditorium in SF on February 2, 1968, on my first date with my husband.”
Another added, “Outstanding… You win. I am so jealous you saw Jimi in person.”
One user also replied, “The ticket alone is practically an engagement ring in sentimental value. I mean, how could anyone resist an opportunity to fall head over heels when Jimi Hendrix is playing the soundtrack to your beginning, live? The man played his cards very wisely. Please give him props from a random internet millennial who’s obsessed with the era!”
2. GWAR, 2004
One Redditor posted, “GWAR. Halloween. 2004. They fought a dinosaur after decapitating both GW and John Kerry… A vulgar live-action bug bunny cartoon.”
Another user said, “Gwar is one of those bands I always tell people they need to see live once, even if they’re not fans. It’s a wild experience,” a user commented. Another replied, “Coolest show ever!! I’ve seen them 15+ times, and I have a blast every time! What the people want could only be the senseless slaughter of the gutter slime that litters this nation for cash and prizes.”
One user shared, “My first Gwar show was with Misfits, Mephiskapheles, and Earth Crisis, the late 90s. Maybe not the greatest concert music-wise, but hands down one of the most entertaining. Totally agreed that everyone should see them once, I brought a bunch of friends that might listen to Green Day on an especially rebellious day, and they all had a blast. But, they’re really not the same since Oderus died, unfortunately.”
3. Queen with Thin Lizzy Opening, 1978
One user shared, “Queen with Thin Lizzy Opening, 1978”
Another user replied, “Saw that show in Houston. Fantastic.”
A third user added, “I hate you now because I’m overcome with jealousy.”
Another commenter said, “I saw that show in San Diego. Definitely the best of the best!”
4. Nirvana, 1992
Nirvana played their first (and only) show in Buenos Aires, Argentina, on October 30, 1992. The performance at Estadio José Amalfitani became infamous for several reasons: it followed on the heels of Nevermind and was one of the band’s largest shows to date.
One Redditor posted, “Nirvana 1992.”
“Oh man, I am so jealous. What do you remember about it?” exclaimed another user.
One user added, “It was just a long, powerful raw show. No elaborate set or tour package (e.g., see Motley Crew or Rolling Stones), and the stage was pretty bare, but the band was all energetic and loud. Kurt captivated the crowd with his emotion and angst. In one of my first big arena concerts, the mosh pit was never-ending and sped up and slowed down to Cobain’s guitar all night. The energy was electric. I’ve seen a ton of shows since, but I’ve never seen anything quite like it.”
“This is the right answer,” another commenter replied.
“I feel like I need to stop reading the answers to this question because I’m just full of endless jealousy. This must’ve been incredible,” One Redditor complained.
5. The Pink Floyd Division Bell Tour, 1994
One Reddit user shared, “The Pink Floyd Division Bell Tour in 1994.”
Another responded, “Saw it in Raleigh. Magical.”
A third commenter replied, “Oh d***, you win! This might be a controversial opinion, but Division Bell is my favorite Pink Floyd album, and I’m glad Roger Waters left when he did.”
6. Nine Inch Nails, Los Angeles
Nine Inch Nails, abbreviated NIN and stylized as NI, is a Cleveland-based American industrial rock band formed in 1988. Trent Reznor, the band’s singer, songwriter, multi-instrumentalist, and producer, was the only constant member until his frequent collaborator, Atticus Ross, joined in 2016.
One Redditor posted, “My #1 fav was NIN during Wave Goodbye in 2009 at the Henry Fonda Theatre in Los Angeles. It took me years to wrap my head around the awesomeness. My number 2 fav shows are Guns n Roses from Jan 1992—they were insanely good. Soundgarden was the opener.”
Another user replied, “I saw them at the Hollywood Bowl in 2014 when they played with Soundgarden. I’m a big Soundgarden fan and have always appreciated NIN, but I was there to see Soundgarden. NIN blew my mind and immediately became the number 1 concert for me.”
Another commenter replied, “Seeing them a few times (my fav band) and watching them play Hurt with the giant projector screen like in the music video is always an entrancing experience.”
7. U2, at Sullivan Stadium
A commenter shared his experience, “Before U2 were hated, I stood at the old Sullivan stadium, age 17, Bono with his arm in a sling after falling off the stage in DC. When you’re 17, everything matters more. The show was solid. Edge made a Hendrix impression on Bullet the Blue Sky. The final song was a chorus repeating ’40,’ which the crowd sang over and over again as we exited the venue. Maybe later they did dumb stuff, but that night, U2 gave us a good time.”
Another user agreed, “U2 Joshua Tree tour for me. I’m not a huge U2 fan, but the energy is. They held 50,000 people’s emotions in the palm of their hands.”
8. AC/DC Hockenheim, 2015
A user shared, “AC/DC Hockenheim 2015 first concert ever, and my dad really wanted me to see them. Had a blast because of all the cool shit they came up with. Brought up a bit f- bell and rang it all the time during Hells Bells.
They even sold small blinking horn headbands at the entry point for like 5€ or something. So you could see about 20,000 blinking headbands once it turned dark.
And Angus Young played a solo that felt like it took 20 minutes.
One of the best days I ever had with my father.”
9. Lake Street Dive
One user shared, “Lake Street Dive. Oh, my goodness. They were opening for the Avett Brothers, and I had heard one of their songs before, but I’d never heard of the band or listened to them other than one song in a passive way. Oh, my goodness. They blew me away. I’d seen LOTS of live shows before, but none made me feel the way they did: their close harmonies, their groove. I fell in love with them. Their live sound is better than their album sound. But their album stuff is excellent too. They became my favorite band overnight.”
Another replied, “I saw that lineup. I became a fan, but LOVED the Avett Brothers.”
A third user responded, “The Avett Brothers were good too, but I was just going because my mom is a HUGE fan of them.”
10. Rammstein, Oslo, Norway
One user posted, “RAMMSTEIN.”
Another replied, “Rammstein in Oslo this summer. Standing in a packed crowd for over four hours before the warm-up act started! What a pyro fantastic show.”
One Redditor added, “Rammstein has it all. Fire. Lasers. Fun props. Confetti.”
A fourth commented, “Rammstein 2010. Also, most recently, Birdland’s Big Band, New Year’s Eve, directed by the great David de Jesús.”
Source: Reddit
10 Celebrities Who Are Universally Disliked
People will always have preferences and something to say about celebrities. What you might love may not be the same for others. Whether it’s about their past behaviors, legal issues, or feuds with other celebrities, here is a list of celebrities people just cannot stand.
10 Celebrities Who Are Universally Disliked
11 Vampire Movies That Will Leave You Yearning for More
Sometimes, we just love to watch a favorite vampire movie; one of the ones that never get old. It piques our imagination with the unknown, story of two teenagers fighting for their love, the incredible and creepy scenes, and the bloodsucking classics.
11 Vampire Movies That Will Leave You Yearning for More
25 Extraordinary Sequels and Remakes That Outshine the Originals
Every once in a while, a movie sequel or remake surpasses the original film. After polling the internet, “Name a single movie where the sequel or remake was better than the original?” Here are the top-voted responses.
25 Extraordinary Sequels and Remakes That Outshine the Originals
25 Blockbuster Films With Behind-The-Scenes Turmoil Unknown to the Public
Several big movies with significant nightmare productions have some seriously delicious tea. After a recent poll on the internet, here are twenty-five films with disasters that made filming difficult.
25 Blockbuster Films With Behind-The-Scenes Turmoil Unknown to the Public
We’ve all been there – sitting through a movie that we can’t help but cringe at, but somehow it still manages to hold a special place in our hearts.
These 10 Terrible Movies Are Still People’s Favorites
New Zillow research finds the share of first-time buyers has hit 50%, the highest level in years
SEATTLE, Aug. 23, 2023 /PRNewswire/ — Half of all home buyers are purchasing their first home, the highest share that Zillow has ever recorded. Zillow’s 2023 Consumer Housing Trends Report finds that first-time buyers now make up 50% of all home buyers, up from 45% last year and a meaningful jump from 37% in 2021. The share of first-time buyers likely hasn’t been this high since around 2010, when there was a first-time home buyer tax credit.
First-time buyers are making gains relative to repeat buyers. Zillow research finds a vast majority of homeowners with mortgages have locked in a rate below 5%, and are almost half as likely to consider moving. It’s true that first-time buyers make up a larger piece of a smaller pie, as home sales and inventory shrink. However, this significant rise in the share of first-time buyers helps explain what’s driving demand and keeping upward pressure on prices in a market with mortgage rates surpassing 7%.
“High mortgage rates and a shortage of inventory is keeping would-be repeat buyers in their current homes,” said Zillow senior population scientist Manny Garcia. “A greater relative share of first-time buyers is filling the gap, and they’re competing against each other for the limited number of affordable starter homes on the market.”
Affordability is the greatest hurdle for first-time home buyers. It now takes nearly 12 years for a typical first-time buyer to save up for a down payment, compared to nine years prior to the pandemic. Meanwhile, the typical monthly home payment has more than doubled in that time. Yet the growing share of first-time buyers suggests many are getting creative to make homeownership a reality.
Zillow’s report finds that most first-time buyers are tapping at least two sources to finance their down payment (60%), most commonly their savings and gifts from family or friends. Down payment assistance can help, and available programs are included on every for-sale listing on Zillow.
There are other tools helping first-time buyers anticipate and manage monthly costs. A new app filter on Zillow allows shoppers to search for homes by monthly mortgage cost, instead of by list price. In addition, a growing share of buyers are paying an upfront fee to reduce the interest rate on their mortgage and in turn, lower their monthly payment. Research from Zillow Home Loans finds nearly 45% of conventional primary home borrowers bought points to ease monthly costs, compared to 30% who did the same in 2021.
Nearly half of first-time home buyers are millennials (49%), a massive generation of adults ages 29–43 who are fueling fundamental housing demand as they hit their prime home-buying years. Gen Z adults between 18 and 28 years old are hot on their heels, making up more than one-quarter of all first-time buyers (27%).
These younger buyers are debunking the “lazy millennial” myth by working harder during the home-buying process. Zillow’s report finds that first-time buyers are more likely to contact at least three real estate agents and three mortgage lenders, compared to repeat buyers. They’re also more likely to make at least two offers on homes, and are more likely to report being denied a mortgage at least once before they’re approved for a loan. First-time buyers are seeing their persistence pay off for a piece of the American Dream, and many still believe the opportunity to build equity outweighs today’s higher costs of entry.
About Zillow Group:
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.
Zillow Group’s affiliates, subsidiaries and brands include Zillow®; Zillow Premier Agent®; Zillow Home Loans℠; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠, which includes ShowingTime®, Bridge Interactive®, and dotloop®.
It wasn’t long ago that real estate was deemed toxic, untouchable, whatever bad thing you want to call it.
But times have changed, thanks to low interest rates and massive price cuts. And one group seems to be taking advantage, namely, the Millennials.
If you’re not familiar, they are a group of youngsters born between 1980 and 1995, who also go by the name “Generation Y” and “Generation Next.”
Interestingly, it is this group that purchased the most real estate between July 2012 and June 2013, according to the 2014 NAR Home Buyer and Seller Generational Trends study released today.
Gen Y = Largest Share of Recent Home Buyers
Millennials don’t just text, play around on Twitter, and create cool Tumblr blogs. They also make money and buy things.
In fact, the group accounted for 31% of recent residential real estate purchases, leading all other generational groups.
At the same time, Generation Next had the smallest share of home sellers at just 12%, which makes sense given the young age.
The median age of a Millennial home buyer was 29 and median income was $73,600. An overwhelming 75% were first-home home buyers.
They were most likely to buy a property in an urban or central city area and stay in their homes for 10 years.
Interestingly, they purchase homes primarily for the “desire to own” a home, not to get rich.
In the home buying department, they were followed very closely by Gen X, which includes individuals born between 1965 and 1979.
For the record, I am part of Gen X, though just barely seeing that I was born in the summer of 1979. My group accounted for 30% of recent home purchases and the largest share of home sellers at 29%.
I’m assuming there was a lot of buying and selling in my generation because there were those that bought early and are now unloading, perhaps because of newly gained home equity.
Though 19% indicated that they had to pump the brakes on a home sale because of equity constraints.
Then there are those that did not buy during the boom, and wanted in after prices and rates tumbled. Fortunately for this latter group, they probably have good jobs, plenty of assets, and decent credit.
Gen X buyers plan to stay in their current homes for 15 years, and are most likely to think their home is a good financial investment (87%).
Boomers Aren’t Booming Anymore
The other generations in the study included Younger Boomers (1955-1964), Older Boomers (1946-54), and the so-called Silent Generation, those born between 1925 and 1945.
All three groups were relatively quiet on the home buying front, with 16% of recent home purchases coming from Younger Boomers, 14% from Older Boomers, and just nine percent from the Silent Generation.
This all makes sense, given the fact that most from these generations are already established and in homes they purchased years ago.
Most from these groups, along with Gen Xers, bought homes in suburban areas, as opposed to the city.
And roughly a quarter of both sets of Boomers own more than one home, including an investment property and/or vacation home.
Almost nine out of 10 buyers used a mortgage to purchase their home, and the all-cash share increased with age, as expected.
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If you know where to look, you can find stylish home decor, furniture, and accent pieces at Amazon—without spending all your coin. As a professional Amazon shopper, I’ve got lots of practice uncovering diamonds in the rough on the mega-retailer’s back pages. This month, I’ve been on the hunt for stylish flower vases and planters to bring some life back into my home decor collection. Like any self-respecting millennial, I also have a thriving indoor garden to tend.
So, I went to work looking for flower vases and planter pots worthy of receiving pride of place in my home. My goal was to find home decor pieces that don’t look like they were purchased on Amazon. Scroll through below to check out my picks.
Home Habitat Nordic Vases (Set of 2)
I love the combination of curves and straight lines in this duo of Nordic vases, which have a unique geometric shape. They have a speckled ceramic exterior and are stylish enough to set out on a coffee or kitchen table. At the same time, the neutral colors won’t draw too much attention, letting your flowers take center stage. These vases will pair perfectly with sculptural candles, which have become super popular in recent years. And, the smaller vase will also come in handy for short-stemmed flowers.
Buy Home Habitat Nordic Vases (Set of 2) at Amazon, $42
Rhapsody Studio Ceramic Vase
’70s-inspired design has been really popular among the Etsy set lately, and this matte ceramic vase would be a gorgeous addition to any bohemian home. Rhapsody Studio is one of those hidden gems on Amazon I mentioned earlier, and they have more vases and throw pillows worth a closer look too.
Buy Rhapsody Studio Ceramic Vase at Amazon, $39
Ban.do Vintage Inspired Orange Juice Vase
Ban.do is best known for its colorful journals and planners (which I also love), and the brand has expanded its Amazon storefront to include retro drinkware and vases. My favorite is this artist-designed ceramic vase, which looks like a retro carton of orange juice.
Buy Ban.do Vintage Inspired Orange Juice Vase at Amazon, $28
Female Form VaseDown from $30
This cheeky vase’s color is officially called “Blush Pink Bottom,” and that pretty much says it all. The female form is a popular subject in art and home decor—as it should be—and this elegant planter is sure to be a conversation starter. Some people might say it’s tacky or in poor taste, but I can’t think of a subject more worthy of admiration.
Buy Female Form Vase at Amazon, $16
Woodland Pulse Boho Planter Pot
This asymmetrical planter pot comes from a design studio called Woodland Pulse. Based in Oklahoma City, this family-owned small business makes unique modern planters made from 3D-printed recycled wood. Not only can this planter hold your new succulent or snake plant, but it can also double as an aromatherapy diffuser.
Buy Woodland Pulse Boho Planter Pot at Amazon, $42
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At what point after graduating college do we let go of collapsible dinner tables and high-end knock-offs? For interior designer Charlie Ferrer, the answer is ASAP. The Chelsea-based creative founded his own interior design studio and gallery in 2012, offering a plethora of furniture, lighting, and art by both notable and emerging designers. The joint practice has been the go-to agency for fellow creatives and private collectors who appreciate his eclectic eye. Here, Ferrer discusses his personal favorite artists, the importance of supporting smaller talent, and the secret to putting together a tasteful interior.
CULTURED: What do you think makes the New York art scene distinct?
Charlie Ferrer: The density of resources. New York has the highest concentration of galleries, dealers, institutions, working artists, curators, advisors, conservators, and, not least, collectors. This proximity of people and talent, money and ideas, breeds a highly productive atmosphere.
CULTURED: You’ve been billed as a “millennial designer.” What do you think this generation is doing right and wrong in their homes?
Ferrer: There are plenty of young collectors participating in the art and design markets at advanced levels, and that’s great. I wish for more participation at the emerging level. There is a vast world of young people making art. Where are their collector counterparts? I would love to see the coalescence of a larger community of “emerging collectors,” a group that supports their artist contemporaries, choosing art and design purchases as frequently as other discretionary categories like fashion and travel. The spend can be modest—it’s less about money and more about curiosity, education, a shift in focus. I rarely walk into the home of a 30-year-old or even a 38-year-old to find a handful of thoughtfully collected pictures or objects. I find this reality disappointing.
This same wish extends to interiors and collectible design. Millennials tend to consume commodified retail products. Why choose formless sectionals, poorly knocked-off Scandinavian design and Pierre Jeanneret reproductions when there are so many opportunities for an individualized expression of taste? Historical design and specialty goods for the home are more accessible now than ever.
CULTURED: How does a client’s art collection impact your vision for their interiors? How did you build your space around your own?
Ferrer: I am selling collected environments. When a client comes to me with an existing collection of art and/or design, we make space for it. I prefer that every room I touch contains art and objects, but I do not necessarily design rooms for art or the inverse—select art for specific rooms. I suppose large-scale works are one exception. If a work requires a massive wall, a special path of access into the space, etc, we plan for that early on in our process.
Philosophically, I believe in collecting for the sake of a collection and creating interiors that support and dialogue with that collection. I build spaces through an iterative process of layering in which every object is something of meaning on its own. As a project evolves, an assemblage of cool things grows. The vision for the project as a whole eventually takes form. The sum of its parts feels eclectic and organically collected because it is. The best projects are never really finished, they keep evolving, even if just in small ways.
When it comes time to install art, I do like to hang densely, often asymmetrically and sometimes unconventionally, so long as the client is on board.
David Morehouse worked at the Hammer during our years there. Through David, I enjoyed a lot of exposure to artists and collectors and dealers—artists like Mark Bradford, Mark Hagen, Elliott Hundley; collectors Eugenio López, Beth Rudin DeWoody, Bill Bell, Alan Hergott and Curt Shepard; dealers Shaun Regen, Hannah Hoffman, Nino Mier, David Kordansky. The art world in LA 10 plus years ago felt like a small club. That period in my life was vastly eye-opening. It clued me into a world I did not know. Though I had a gallery for a year where we showed furniture and art (featured in CULTURED‘s Spring 2013 issue), I don’t think I actually acquired any art for myself until I left for New York.
CULTURED: What is the first piece you ever bought?
Ferrer: An abstract painting by Shinpei Kageshima from Take Ninagawa at NADA, Miami Basel in 2011. That was an exciting moment for me—being at a busy fair, finding a work by a young artist that spoke to me, shown by a dealer who had come from so far away, offered at a price I could conceivably afford.
CULTURED: Which work provokes the most conversation from visitors?
Ferrer: A mixed media piece composed of used socks, silicon, and pigment on canvas called A Rag of Sorts by Jesse James Thompson. It is appealingly tactile and fetishistic. The colors are beautiful and so is the bronze frame I had made for it. I bought the work out of a group show of MFA candidates put on by Edsel Williams at The Fireplace Project in East Hampton.
CULTURED: Which artist are you currently most excited about and why?
Ferrer: Kevin Beasley, in particular his figurative sculptures, for their rich materiality and the palpable emotion they embody for me. Pretty much anything is shown by Gordon Veneklasen at Michael Werner. The quality of their program is impeccable. On the design side, I am impressed by what Alex May is doing with SIZED out of Los Angeles. The shows are broad and ambitious. They inspire me.
CULTURED: What was the most challenging piece in your personal collection to acquire?
Ferrer: For lovers, maybe, but for art I’m not one to play the hard-to-get game. I just don’t have the bandwidth to get involved at that level personally. I suppose for me the toughest acquisition was my César sculpture because it was a matter of finding the funds when I found the piece. Sometimes, I stretch my limits to get a work I know I want. There is a distinctive gut feeling, a reflex. I imagine others can relate… The timing was right enough for the César. Thankfully, the gallery was patient, and it worked out. I am very fond of that piece.
CULTURED: Is there one piece that got away, or that you still think about?
Ferrer: One of Christopher Wilmarth’s ethereal glasswork sculptures at Craig Starr Gallery. Craig put on a show in 2020 that I continue to daydream about.
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This article originally appeared on The Financially Independent Millennial and was republished with permission.
If investing is of interest to you, then you’ve probably heard about stocks vs. options. How can you make the best choice when deciding which investment strategy to use?
After all, investing comes with risk attached – learning how to navigate that risk and make sound investment decisions is the key to building a good investment portfolio.
Knowing as much as you can about options and stocks will mean you can make better investment choices. In this comprehensive guide, I’ll explain the differences between stocks vs. options in detail. Armed with this knowledge, you should be better prepared to achieve your financial targets.
What Are Stocks?
A stock means you own part of a company that has sold shares on an exchange. These shares that you can buy are known as stocks. When you buy shares, you’re then a shareholder of that company.
Every company has a certain number of shares available on the stock market. Those stocks can be bought and sold on the stock exchange. Each company decides how many shares can get bought and can raise or lower how many shares are available on the exchange at any time.
The stock market can rapidly change from one moment to the next based on many factors. Anyone trading in stocks must remain aware of how their stock is performing to minimize the risk of a loss.
Benefits of Stocks
The first benefit of investing in blue chip stocks (unlike options) is that most investors will build wealth, as stocks nearly always rise over a long period. Individual stock prices fluctuate daily, but investing in companies with a proven track record of growth and investments means in the long-term, your wealth will grow.
Investing in stocks is extremely easy these days, thanks to modern technology. You can get started with just a mobile phone and an internet connection with many apps doing a lot of the hard work for you. This ease of access makes stock trading appealing for many beginner investors.
It also means you can often start trading using small amounts. Learning to trade for a few dollars a month is a great way to build confidence and understand how it all works. Once you’re established, then you can gradually invest more!
Stocks are good assets to have as they are considered liquid. Liquid means they can be converted to cash quickly, unlike other assets such as real estate. And, this may good if a situation arose that required you to get cash fast.
Drawbacks of Stocks
Investing in stocks comes with risk attached. The biggest one is that the price could drop dramatically, and you lose all your investment. Stocks can vary wildly from one day to another. Therefore, experts recommend stocks as a long-term investment strategy, and you should plan to keep the money invested for at least five years.
Another way to avoid losing all your investment is by diversifying your portfolio. Don’t put all your money into one stock. Invest in a variety of stocks to spread the risk.
Other drawbacks of trading in stocks include fees, capital gains taxes, and commissions. Commissions and fees vary. Some brokers don’t charge any at all. Make sure to shop around before opening a brokerage account to find the best deals for you.
While investors can’t avoid taxes, the rate you pay does vary depending on several factors. How much profit you’ve made, your income, and how long you’ve held the stock affects Rates. Generally, any investments held for less than a year attract a higher rate—another good reason to own stocks long-term.
What Are Options?
An option is when you purchase the right to buy or sell an asset (typically a stock) for an agreed price and at an agreed time. The seller has no choice but to allow you to exercise the option. The buyer pays for the right (but not the obligation) to have the option to buy or sell an underlying security for an agreed price on or before an agreed date.
There are two types of options – call options, and put options.
Call Options
Call options are the most common. Investors who buy call options expect the stock price to end up above the strike price before the expiration. Profit gets made when investors can either sell the stocks on the open market for a higher amount than they paid or sell the option they originally bought for a profit.
Call Option Example
An investor may buy a call option on AAPL with a $120 strike price that expires 9/17/2021. The investor pays $6 for the call option (Options get sold in lots of 100, so the total is $600). If at expiration (9/17/2021) AAPL is trading at $130, the investor can either:
1 – Exercise the option by buying 100 shares of AAPL for $120 each and then sell them to the open market for $130 each making a net profit of $400 ($10/share gross profit – $6 premium * 100).
2 – Sell “to close” the call option before expiration for a profit.
Put Options
Investors buy put options as a way to insure against a downturn. For example, investors can sell an asset at a specific price within an agreed time (expiration). These options work the opposite way to a call option. Investors buy put options hoping the stock price will drop. Profit gets made when investors sell the underlying security at a higher price than it’s worth.
Related read: How to Sell Covered Calls for Monthly Income
Put Option Example
You buy put option on AAPL with a strike price of $100, expiring 9/17/2021. The cost of this put option is $20 ($0.20 * 100 shares). On expiration, if AAPL is trading at $95:
You can exercise the option and sell AAPL to the Put option seller for $100 each. Doing so will earn you $5 minus the original $0.20 premium, times 100 (net total $480).
Or
You can sell the put option at a higher price than you originally paid for it.
Benefits of Options
Investing in options usually costs less upfront than stock trading. And, this can be appealing if you’re starting to invest and don’t have much capital. You could get more for your money trading in options.
Trading in options can be more flexible than stocks. That’s because you’ve got several moves you can make when deciding how to play out your investment strategy.
You can exercise the option and buy the shares to add to your investment portfolio. Another option is to exercise the option and either buy or sell the shares at a profit. There are also various points through the process where you could sell the options contract to another investor.
One of the critical benefits of options is that the underlying stocks strike price is fixed. For the agreed period, the stock price agreed is the price you can buy or sell the stocks for up to the expiration date.
Drawbacks of Options
Options trading can be much more time-consuming than investing in stocks. You might want to exercise the option before expiration, which means keeping a close eye on the stock price. To help with this, you can set up alerts with most online brokers.
Some options strategies carry more risk than others. Some strategies are so risky that only experienced traders should attempt them. You must understand what you’re doing before making the trade. Make sure to do your research and don’t trade in anything you don’t fully understand.
Commissions, fees, and capital gains taxes can also be higher than the cost of trading in stocks. Keep in mind that the more you trade, the more your costs are going to be. Taxes are also higher on investments held less than a year, in some countries.
Stocks vs. Options: Making a Decision
When thinking about stocks vs. options, it’s entirely your choice as to which you prefer. Everyone has their investing style and appetite for risk that will drive their decision.
For beginner investors, or anyone preferring straightforward investing, stocks are usually the best choice. Options may become more appealing as you become a more experienced investor or if you prefer an investment that requires more active participation.
Don’t forget that you don’t have to stick with one or the other. There is no reason you can’t invest in both stocks and options should you want to. Just make sure you have a thorough understanding of any investment before going ahead with it.
Stocks vs. Options: Further Considerations
When considering stocks vs. options, keep in mind that they are intricately linked. You can hold both stocks and options for the same company. Plus, option prices get calculated based on the difference of the strike price and the current stock price, the implied volatility (IV), and the amount of time before expiration.
When planning your investment strategy, there are some questions you should ask yourself to determine how to proceed. What is your appetite for risk? Do you want to make long-term or short-term investments? Do you want to make a mix of investments? Where will you get the best return for the money you have available to invest?
Think about your answers to these questions. Don’t forget to keep in mind your financial goals and your current situation when making your decisions.
Ultimately, only you can decide which investment opportunities are best for you.
Importance of a Balanced Portfolio
Having a diverse and balanced portfolio is essential for achieving your financial goals and, ultimately, growing your wealth.
The best strategy balances the need for long-term returns while absorbing any economic shocks. For example, if all your money is in bank stocks and there’s a financial crisis, you could lose all your money. However, having a balanced portfolio means that although the asset values diminished, your other investments can help balance that loss until the market recovers.
Conclusion
Now that you understand the difference between stocks vs. options, you can make better financial decisions. Making the right choices now makes it much easier to reach your financial goals in the future!
This article originally appeared on The Financially Independent Millennial and was republished with permission.
The views and opinions expressed in this article are those of the author only and are not endorsed by Credit.com.
Investors nearing retirement have different needs than investors with many years remaining in the workforce. Retiring means losing the regular paycheck from work, and as a result, replacing that income is a key consideration. There are many investments that appeal to retirement investors, such as purchasing quality dividend stocks like the Dividend Aristocrats. But there are also many investments that retirement investors should stay away from. Retirement investors should avoid the following 16 investments.
#1: Cash
“Cash is king” is a well-known phrase, but when it comes to retirement investing, cash is hardly king. Cash should be avoided by retirement investors because it earns no return. In stark contrast to bonds which pay interest or stocks that pay dividends, cash earns no interest. As a result, cash loses value over time due to the steady erosion of inflation.
While retirees have a number of pressing challenges to pay for expenses without a paycheck from working, keeping a great deal of cash on the sidelines is not the best idea. Ideally, retirees can generate enough income from their investments, in combination with other sources of income such as Social Security so that they do not need to hold a large amount in cash.
Read more: How to Sell Covered Calls for Monthly Income
#2: High-Yield Bonds
Sometimes referred to as junk bonds, high yield bonds are fixed income securities issued by companies with sub-investment grade credit ratings.
With interest rates still near historic lows, fixed-income yields have plunged over the past several years. As an example, the 10-year Treasury yields just 1.3% right now. With inflation running significantly above this level, retirees will see their purchasing power erode with low-yielding bonds.
Because of this, high yield bonds are appealing due to their higher yields. But investors may be reaching for significantly elevated risk in their search for yield. Bonds with below-investment grade credit ratings have a higher likelihood of default.
Read more: Can You Retire at 62 With 300k?
#3: Cryptocurrencies
Cryptocurrencies like bitcoin are all the rage these days. The massive rise in the value of bitcoin and other cryptocurrencies over the past few years is enticing for any investor. And cryptocurrency gets a lot of coverage in the financial media.
But retirees need to remember that volatility is a two-way street. The price of bitcoin has declined by nearly 50% from its 52-week high, a reminder that any investment can lose value. Bitcoin also does not pay interest or dividends, meaning investors will not generate income from their investment. And another reason retirees should avoid Bitcoin is simply the higher level of risk involved in buying cryptocurrencies, not to mention the tax implications.
#4: Oil & Gas Royalty Trusts
Oil and gas royalty trusts are niche securities within the stock market. These are companies that own oil and gas-producing properties. Investors receive distributions depending on how much income the trusts generate from these properties. Some well-known oil and gas royalty trusts include BP Prudhoe Bay Royalty Trust (BPH) and Permian Basin Royalty Trust (PBT).
As with any group, not all royalty trusts are bad investments. But the risks are high across the board—royalty trusts are essentially a bet on underlying commodity prices. Investors also have to face the prospect that reserves will decline faster than the trust had originally anticipated.
If oil and gas prices fall, share prices of the royalty trusts collapse, and their distributions decline, often to zero as occurred in 2020 during the coronavirus pandemic.
#5: Mortgage REITs
Real Estate Investment Trusts, also referred to as REITs, are a great way for retirees to earn higher levels of investment income. Many REITs have strong yields of 4% or more. Retirees might be tempted to buy mortgage REITs, a subset of the asset class that typically offers even higher yields.
Indeed, many REITs have double-digit yields in excess of 10%. But in many cases, sky-high yields are an indication of elevated risks, and mortgage REITs are no different. Mortgage REITs are extremely complex, financially architected business models that are not easy to understand, making them relatively poor choices for most retirees. In addition, mortgage REIT share prices and their dividend payouts can swing wildly based on changes in the yield curve.
Read more: Diversify Your Portfolio With These Top 10 International ETFs
#6: Gold
Every few years or so, gold gets a lot of attention in the media, usually because the price of gold has risen over a certain period of time. But for retirees interested in generating sustainable income from their investments, gold should be avoided.
Gold pays no dividends or interest, which is why it is not attractive for many retirees. To quote legendary investor Warren Buffett on gold: “The idea of digging something up out of the ground, in South Africa or someplace and then transporting it to the United States and putting it into the ground, in the Federal Reserve of New York, does not strike me as a terrific asset.”
Some gold stocks like Barrick Gold (GOLD) do pay dividends, but their dividend track records are highly inconsistent. Many gold stocks have cut their dividends when precious metals prices decline.
#7: Momentum Stocks
Momentum stocks are those that have captured investors’ attention, most often due to a rapid rise in their share price. This causes other investors to jump in, perhaps because of a fear of missing out, which can push share prices even higher. But in many cases, momentum stocks fall back down to Earth, as their underlying fundamentals may not justify the rallying share price.
Momentum stocks that have gotten a lot of attention in the financial media in recent months include GameStop (GME), AMC (AMC), and more. In all cases, their share prices skyrocketed in a relatively short period of time. But retirees should resist the urge to buy momentum stocks, as they can be highly volatile and almost never pay dividends.
Read more: 15 Dividend Kings With 50+ Years Of Dividend Growth
#8: Microcap Stocks
Stocks can be classified according to their market capitalizations, which is simply the current share price multiplied by the number of shares outstanding. Large-cap stocks have market caps above $10 billion, while small-cap stocks have market caps below $2 billion, with midcaps in between these ranges.
The smallest group of stocks is known as microcaps. These are stocks with market caps below $100 million. Microcaps are very small businesses, their stocks generally have low liquidity, and many are in questionable financial condition. As a result, retirees should stick to midcaps and large caps.
#9: Stocks With Too Much Debt
Debt is a big concern for income investors such as retirees. Stocks with bloated balance sheets and too much debt are at high risk of cutting or suspending their dividends during recessions. Profits may decline substantially when the economy enters a downturn, but debt still needs to be repaid.
Stocks with excessive debt have high-interest expenses that may force them to cut their dividends. This is of particular concern when it comes to high-yield Master Limited Partnerships, many of which have leverage ratios above 5x.
Therefore, retirees could generate dividend income with other tech stocks like Apple (AAPL), Microsoft (MSFT) or Cisco (CSCO).
If you’re struggling to save up for a down payment on your first home, you could do a lot worse than move to Chicago, where it’s possible to do so within just three years, according to a new analysis from RealEstate.com.
The property listings site analyzed industry data to come up with the top ten metros where first-time buyers should find it easier to save for their first home, and also ten metros where it would probably be the most difficult.
The analysis found that in Chicago, a first-time buyer would only need around three years to save for a 20 percent down payment on a typical starter home, which is the fastest time in all 35 metros analyzed. Other metros, including Dallas, Detroit and Baltimore, take an average of just four years saving time.
Realestate.com factored into its equations the median household income for millennials (aged 24 to 36 years), then estimated how much their annual savings would be in order to determine how long it would take to save for a down payment on a starter home, or one that’s priced within the bottom third of the market.
The company says the study is relevant because almost half of all first-time buyers move outside of their current city when buying their first property.
In contrast to Chicago, the estimated time it would take to save for a down payment on a home in Portland, Oregon, is a staggering 13 years. That’s because the estimated annual savings for a millennial household in Portland are just $5,288 (compared to $10,821 in Chicago) and home values are much higher.
Those living in cities including Denver, and San Jose and Riverside in California, would also take more than ten years of saving to afford a down payment.
“Contrary to popular belief, millennials want to buy homes, but high home prices, low inventory and stagnant wage growth are some of the many factors that may be driving would-be buyers into delaying homeownership,” said Justin LaJoie, RealEstate.com General Manager. “However, in certain U.S. housing markets first-time buyers can find some relief; they just need to know where to look.”
To help first-time buyers better understand the total cost of homeownership, RealEstate.com allows home shoppers to search based on homes’ “All-In Monthly Price,” which includes estimates for costs such as mortgage, property tax and utilities, giving them a more accurate picture of the cost of homeownership.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
Gary Keller took to the stage at the 2023 Keller Williams Mega Agent Camp in Austin, Texas, Tuesday morning with his usual bravado: a black-and-white video featuring his favorite animal, the buffalo, in a thunderstorm, alongside a motivational message for agents. Rather than fear the storm, Keller Williams agents embody resilience and adaptability to conquer any market challenge. “We are the storm,” the text read.
Keller kicked off the first day of the two-day gathering by offering his take on the housing market and economic conditions. Despite persistent inflation challenges, a volatile mortgage market and limited inventory, Keller said it was still a good time to buy a house.
“It is always the right time to buy the right piece of real estate,” Keller, the executive chairman and founder, said. “Timing is a fool’s game.”
Instead of allowing homebuyers to be educated by “clickbaity” videos espousing an impending real estate crash, Keller told agents that they need to take charge of the narrative and be the ones out there educating consumers on their local housing market.
“Our goal is for you to always be the economist of choice in your local market,” Keller said.
Keller did acknowledge that it has been a slower year for the housing market and agents.
“Our industry is in a recession,” Keller said. “But my bet is that we are already close to the bottom of what the real estate market would do no matter what. I think we’re on Skid Row right now, so I don’t think it is going much lower.”
To illustrate his point, Keller highlighted that the industry is projected to see 4.3 million home sales this year, significantly down from the 6.12 million sales in 2021, but roughly the same as 2009 to 2012.
“If you look at the trend line, given the overall economy, there is not a whole lot of room to go, to get to the bottom,” Keller said. “Yeah, you could drop down to 3 million, but we haven’t seen that in 30 something years in what was a completely different setting than you are in now. In modern times I think that number is more around 4 million, so I don’t think we have anything shocking in the real estate space.”
Fewer overall transaction sides means the average number of sides per agent this year will come in at roughly 5.7 sides, however, the average market volume per agent is projected to come in at $1.44 million, the fifth highest year on record, he said.
Keller attributed this to the increase in median home sale price which is projected to come in at $382,000 for the year, 7% above the trend line of 4% annual increases.
“People say it is way overpriced, but it is not phenomenally overpriced,” Keller said. “The trend line goes up 4%, which is the expect annual appreciation of building a home. In 2006 we were 21% above the trend line and now we are only 7%. Think about it this way, if next year real estate holds, meaning that it doesn’t go up by 4% we are just barely above the trend line and if it drops by a percent then we would be only 2% above the trend line.”
In addition, Keller noted the wave of first-time Millennial homebuyers and move-up Millennial homebuyers who are hitting their peak earning years will be hitting the housing market in the next few years, giving agents more reasons for optimism.
Keller concluded the discussion by circling back to the opening mantra of “we are the storm.”
“If you do the work, you will have a great year in real estate, regardless of the market,” Keller said. “If you don’t do the work, and spend your time trying to avoid contact with people, you aren’t going to like this industry very much.”