Perpetually offered the short end of the stick, the pandemic has proven to be a double-edged sword for millennials. While some movedmany have been able save and emerge from COVID-19 twice as wealthy as they were before. This coincided with the generation reaching maximum age to buy a houseand the second year of the pandemic saw the start of a Baby boomas nearly half the generation caught the fever of age-old American ambition to move to the suburbs. But millennials might as well signal sadness Music by Charlie Brown And slip away when they look at the current state of the housing market. Massive student loansthe Great Recession and a Cost of life which exceeds their salaries, all keep this generation unable to build up a heritage like their parents and grandparents. And to top it all off, one of the nation’s leading housing economists, herself a millennial, crunched the numbers and uncovered the ugly truth: that millennial parents, baby boomers who seemed to benefit from all the economic breaks of the last 50 years, steal all the first houses and turn them into retirement homes instead.
Covering housing for at least 10 years, Ali Wolf gradually rose to the position of chief economist for Zonda, a distributor of housing market data and advice. A millennial herself, Wolf has first-hand experience of what her generation faces, having lived in Southern California, a state that personifies America’s housing shortage and ensuing generational shock.
As baby boomers downsize and millennials finally enter the housing market, Wolf says, they’re in direct competition for similarly priced and sized homes.
“In today’s housing market,” says Wolf Fortune, “there is a big overlap between some baby boomers and some millennials.” She used the archetype of the empty-nested baby boomer couple and the millennial couple without children or with young children. Essentially, the first group is looking for their retirement home and the second is looking for their first home, and something has to give. “The main difference here is that baby boomers will likely be able to tap into their home equity by selling their existing home, which may allow them to make a more compelling offer on the home compared to millennials. , especially if the latter group is still renting.”
There are two things going on with baby boomers, as Wolf explains: AARP data shows that most baby boomers are looking to stay where they are right now, but the National Association of Realtors shows that baby boomers are the best buyers and sellers right now. And many more baby boomers are planning to retire soon. THE skyrocketing child care costs has baby boomers looking to help their millennials by selling and coming together to provide extra help raising pandemic babies, but that ironically amounts to excluding their children (and their friends) from the market. Wolf said Zonda started following that dynamic with what she calls the Baby Hunter Index, which tracks the cities where baby boomers follow their children most dutifully (ending up fueling larger migration patterns in once-affordable cities like Charlotte, North Carolina). According to Wolf, Zonda data shows that 25% of baby boomers move to be closer to their grandchildren. More recently, Zonda discovered that these baby hunters are often move to the southeasta market that has become a hotspot due to its relative accessibility for homebuyers of all ages.
This all leads to an awkward hello to mom when she outbids you at the open house. Baby boomers have the advantage, as they seek the same smaller home as someone who dreams of a starter home, and they are often able to take advantage of an all-cash offer, explains Wolf.
By nature, being younger and just plain unlucky when it comes to building wealth, millennials are at a disadvantage when it comes to getting the house, as baby boomers often come into the market “rich in shares” and less price/rate sensitive. The wolf tells Fortune that one important point simply should not be overlooked: some baby boomers and millennials are looking for the same home and baby boomers are often positioned to bid more competitively. Thus, “young people seeking access to the homeownership ladder” face a great challenge in this “overlap with their parents’ generation”.
At some point, the battle between millennials and baby boomers is more the war between millennials who receive help from baby boomers and baby boomers themselves. Dealed a hand arguably easier than their children, many parents report make a financial sacrifice to give a boost to their children and help them in today’s unstable economic climate. Millennials could expect bigger windfalls and more generosity when their parents pass away, says economist Noah Smith tweet that generations will see their trajectory change when they reach their 50s and their parents leave them golden and tight on real estate. That being said, even if millennials have to catch up later in life, it’s “not a great way to structure the distribution of wealth in a society either.”
Even the wealthiest millennials rent, and those who buy versus those who rent are fighting a different battle, as millennials who own their own homes have a little easier time taking on their baby boomer haters. high, mortgage rates are high and overall housing supply is low,” adds Wolf. A larger portion of baby boomers are homeowners, as Wolf points out that 43% of the cohort own their homes mortgage-free. The group also has an advantage given its higher investments in the stock market, she points out. The two combined “have made many baby boomers healthy in terms of total wealth.”
On the other side of the coin, many millennials have simply given up on having a home, shunning the American Dream as something that has only been around for a long time. A Harris Poll finds that most (56%) of the generation believe their dream of owning a home is dead. Recently a little less pessimistic, Ameriprise Financial finds that about six in 10 millennials feel good about their finances, which is likely due to the fact that 78% rely on their family for help to get by. However, things aren’t looking up for millennials, as Wolf says those renting “shouldn’t expect the market to get much easier in the short term” as supply is still limited and there there are buyers who are less susceptible to scams. prices. A recession could reverse the situation, but Wolf notes that does not change the fact that it is increasingly difficult to build affordable housing with a large pool of buyers. While the housing market may cool, “buying an entry-level home is likely to remain a challenge for homebuyers for the foreseeable future,” she adds.