Good or wrong, our economic system always creates Haves and Have-nots.
It is a function, not a bug.
This function has always occurred more often on the stock market than on the housing market:
The lower 90% owns only 12.8% of the stock market1 Only 56% of the housing market. The top 1% owns 50% of the stock market and less than 14% of the housing market.
The greatest financial asset for most households from the middle class is their home.
My worries about the current living situation is that it will make it much more difficult for people in the middle class to keep track of.
This starts to appear in the data.
Baby boomers make by far the largest share of home purchases and selling:
Older people are responsible for almost 60% of all sales of homes and almost half of all purchases. This makes sense when you consider that 40% of all homeowners do not have a mortgage.
Boomers have tons of equity to play with, so high prices and mortgage interest do not matter as much as for young people.
Here is another way to view this data from Torsten:
To be honest, everyone’s median age is now higher because baby boomers are older. It was around 30 in 1980 and is closer to 40 today.
But first home buyers are brought out of the market (via Nonsense):
The average age of first buyers is also going up:
You could explain part of this shift to more young people who go to school longer, but this is mainly because you have to earn more money to pay for your first home now.
Although many baby boomers trade in or move elsewhere for retirement, many are essentially locked up in their current home, whether they like it or not.
Here is an e -mail that I have received that is probably an appropriate case in many areas high costs of living:
My parents -in -law live in La Jolla, a very rich environment here San Diego. However, they are by no means rich, except the house they own. They bought their house for something crazy 45 years ago, such as $ 36,000, possess it downright and it is now worth more than $ 4+ million.
They are in the 80s and do not want to sell because they do not want to pay taxes on the enormous profit they have and remove the step-up basis that their children would receive as soon as they pass. The house is way too big and way too much maintenance, but they have the mentality that if they sell them the next generations fuck by removing $ 600k+, so that they feel trapped.
This is quite common here, because there is a large aging population who is in essence to die instead of selling with a large drop of Down effects for the overall real estate market.
If you inherit a house of your parents, you will get a step -by -step basis for the current real market value when they die. In this situation, instead of a taxable profit of $ 4 million or so, they would, if the children immediately sold, do not pay any won -up tax.
I fully understand where the parents come from here. That is a huge advantage that they offer the next generation.2
But this also forms a situation in which housing in certain parts of the country becomes a cupboard system.
A housing market based on nobility creates even more barriers for the Have-nots or those who are not born in a favorable family situation.
Lower mortgage interest will hopefully help when that finally happens, but my worries are that many people are out of luck when it comes to buying a house.
This makes the stock market more important than ever as a vehicle for building a power.
Continue reading:
How to earn money in real estate
1This is actually an improvement compared to the last time I ran these figures at the end of 2021. The bottom 90% then had 11.1%. The top 1% has fallen from 53.9% to 49.8%. That is a small dent, but more people have helped in the stock market.
2I would tell my parents to do what they want and not worry about me. But good luck with convincing someone to emphasize his own children.
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