The Rich Get Richer. But Will They Buy Houses?
Two reports - from Forbes and the Spectrem Group, which tracks High Net Worth Individuals - suggest that the wealthy bounced back in 2009 from some short term reversals the year before.
The number of millionaires in the U.S. rose 16 percent to 7.8 million in a year of wrenching economic misery for most of the population. And Americans still dominate the list of global billionaires at 40 percent. True, that has slipped from 45 percent a year ago, Forbes estimates, but they do control 38 percent of the $3.6 trillion global net worth of all the billionaires.
So what are they doing with their riches? Trickle down theory has it that they are helping us by... well, I guess by buying yachts and luxury baubles and such. What about pumping some money into the jittery real estate market?Warren Buffet, who still lives in the modest residence he bought in the 1950s for $31,500, could use an upgrade. But a billionaire spending spree isn't likely, since most of the bigwigs already have huge homes (or compounds). Bill Gates -- who was unceremoniously ousted from Forbes' top spot by Mexican telecom tycoon Carlos Slim Helu and his $53.5 billion war chest -- has a 66,000-square foot spread in Washington state. And Michael Dell (#25 on the Forbes list) lives large in a 33,000-square foot mansion in Austin (see great pics on Forbes). Why spend your hard earned money and time trying to carve out yet another multi-acre estate? You can always add on an extra bathroom to the existing palace.
But perhaps some of those newly minted mere millionaires, or the 17 percent who climbed into the over $5 million high net worth category last year, might want to splurge. They could add some extra buying power to the high end of the real estate market, which has been roiled by the economic downturn.
Then again, maybe not. It is believed that much of their increased wealth comes from savvy equity investments which soared as the stock market recovered in 2009. I don't suspect they'd want to cash out now to buy property, although they could pick up some bargains on homes -- or entire streets and towns -- as another 2 million Americans are expected to forfeit their homes this year to foreclosure.