Older people are having a moment in the economy.
According to Axios, people 55 and older now make up more than 45% of spending in America:
The Wall Street Journal shows that the 70 and over crowd now controls around a third of the net worth:
Those 55 and older control almost three-quarters of the wealth:
These kinds of numbers make A LOT of younger people very angry.
I understand the resentment/annoyance/frustration. If you’re not getting ahead, feel like you’re falling behind, don’t own a home or much in the way of financial assets, I get it — you have to blame someone.
There is some context required though.
There are more old people than ever before!
Eric Finnigan from John Burns has some great charts on demographics.
We’ve never had a generation as big as the baby boomers. They’re living longer than previous generations:
These numbers will keep rising:
Many of them have paid off mortgages:
This is also the first group in history to have access to IRAs and 401ks. They’ve had many decades of wonderful returns in the financial markets to allow their assets to compound.
Young people are settling down later in life too:
The thing is, as big as the baby boomer generation is, the millennial generation is slightly larger. The largest cohort in the U.S. is now in their prime household formation range:
There are a lot of buyers on the sidelines right now because housing affordability is so out of control. Sure, some of these people will stay renters but many will eventually get sick of waiting and pull the trigger, high housing prices be damned.
It’s also true that Father Time is undefeated.
Many of the older generation’s financial assets — including homes — will be passed down when they pass away.
The Wall Street Journal has some estimates:
Gen Xers and Millennials are set to inherit $4.6 trillion in global real estate over the next 10 years, according to the report, which incorporated data from research firms Altrata and Cerulli Associates. Nearly $2.4 trillion of that property is located in the U.S.
Boomers can’t take it all to the grave with them.
How will this impact the housing market?
Will the next generation sell these homes? Live in them? Renovate and rent them out?
Is there a Silver Tsunami of homes coming to market because of it? A light drizzle?
Eric joined me on Talking Wealth this week to talk demographics, what it means for the housing market and much more:
Further Reading:
The Destiny of Demographics
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