I don’t know if that is my finance mind at work or simply hitting center age however anytime I journey now there invariably comes a degree the place I pull up house listings within the space on Zillow to get a way of the native housing market.
My household was in Marco Island, FL final week for spring break so after all I needed to do some channel checks on housing costs within the space:
Two issues stand out right here:
(1) There are tons of listings within the space, particularly when you think about how tight the housing provide is for the housing market at giant on this nation. That shocked me.
(2) Holy crap are the costs costly. There aren’t any worth filters on this search. Mainly, all the listings on the island have been 7-figures. Granted, Marco is a really good space and the actual property market in Florida has been on fireplace however I used to be shocked to see the typical house is promoting for someplace within the $1.5 to $3 million vary.
Since Florida is house to a whole lot of retirees and outdated individuals, the one logical conclusion I may type from this train is that child boomers are LOADED.
The individuals promoting the homes for hundreds of thousands are boomers sitting on large positive factors whereas the individuals shopping for the homes (and tearing them right down to construct even larger homes in lots of instances) are rich boomers who can afford multi-million houses.
Millennials are of their prime family formation years however it’s the boomers who’re those within the catbird seat in relation to the housing market proper now.
Boomers have a homeownership fee of practically 80% and plenty of of them have their homes paid off.1 You don’t want to fret about 7% mortgage charges when your home is paid off and you need to use that fairness to fund your subsequent buy.
In keeping with the Nationwide Affiliation of Realtors, child boomers have been the biggest share of homebuyers final 12 months for the primary time since 2012. They accounted for 39% of all house purchases (up from 29% the 12 months earlier than) whereas millennials purchased 28% of homes final 12 months (down from 43% the 12 months earlier than).
Owen Stoneking notes there have been extra houses bought with all money final 12 months than by first-time homebuyers.
While you take a look at the generational wealth divide, boomers do maintain the majority of the online price in america:
As of year-end 2022, that’s greater than $73 trillion for boomers, with a bit greater than $40 trillion for Gen X and simply $8 trillion for millennials.
Right here’s the breakdown by share share:
To be truthful, millennials are doing simply superb in comparison with earlier generations on the identical stage of their lives. And the forgotten era (Gen X) is approaching sturdy.
Nonetheless, there isn’t a precedent for the boomer era. We’ve merely by no means had a demographic this massive with this a lot wealth stay this lengthy earlier than.
Simply take a look at this chart from The Wall Avenue Journal that reveals the variety of individuals aged 65 or older (with projections out into the long run):
However issues don’t line up very neatly with my boomers-are-all-rich take whenever you breakdown the median internet price numbers by age group:
The averages are pretty low as a result of the wealth will not be evenly distributed.
A lot of that boomer wealth sits on the high of the wealth pyramid
The highest 1% holds practically one-third of the wealth on this nation whereas the highest 10% controls two-thirds of the wealth. The underside 90% has round one-third of the wealth in america.
So the focus of houses on a lovely island in Florida will not be a narrative about generational wealth discrepancies. It’s a narrative concerning the focus of wealth on this nation.
Positive many boomers are wealthy however most of that cash is managed by a small share of that demographic.
Sadly, I believe the focus of wealth is a function not a bug within the system through which we function.
I want I had a greater conclusion than that however I don’t actually have a superb reply right here.
How the Housing Market Has Modified America
1The homeownership fee for millennials is extra within the 40-50% vary.