According to Axiospeople age 55 and older now represent more than 45% of spending in America:
The Wall Street Journal shows that the public aged 70 and over now controls about a third of net worth:
Those aged 55 and over control almost three-quarters of the wealth:
These kinds of numbers make a LOT of younger people very angry.
I understand the resentment/irritation/frustration. If you’re not getting ahead, feel like you’re falling behind, don’t own a home or have no financial assets, I understand: you have someone to blame.
Some context is required.
There are more old people than ever before!
Erik Finnigan by John Burns has some great graphs on demographics.
We’ve never had a generation as big as the baby boomers. They live longer than previous generations:
These numbers will continue to rise:
Many of them have paid off mortgages:
This is also the first group in history to have access to IRAs and 401ks. They have made wonderful returns in the financial markets for many decades, allowing their assets to grow.
Young people also settle later in life:
The point is that as big as the Baby Boomer generation is, the Millennial generation is slightly larger. The largest cohort in the US is now in the highest family formation area:
There are a lot of buyers on the sidelines right now because housing affordability has gotten so out of hand. Sure, some of these people will remain renters, but many will eventually get tired of waiting and pull the trigger, high housing prices be damned.
It is also true that Father Time is undefeated.
Many of the older generation’s financial assets – including homes – will be passed on when they die.
The Wall Street Journal has some estimates:
According to the report, which incorporates data from research firms Altrata and Cerulli Associates, Gen Xers and Millennials are expected to inherit $4.6 trillion in global real estate over the next decade. Nearly $2.4 trillion of that real estate is in the US
Boomers can’t take it all to the grave.
What consequences will this have for the housing market?
Will the next generation sell these homes? Living in them? Renovating and renting out?
Will this result in a silver tsunami of houses coming onto the market? A light drizzle?
Eric came with me Talk about wealth this week to talk about demographics, what this means for the housing market and much more:
Further reading:
The fate of demography
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