August 29, 2023
According to TheStreet.com, the Baby Boomer generation owns about half of the nation’s $140 trillion in wealth. These numbers have escalated significantly over the past decade because of gains in the stock market and the appreciation of real estate. According to market research firm Cerulli and Associates, recipients of the great wealth transfer will inherit $84 trillion in assets by around 2043, with $72.6 trillion going directly to heirs and $11.9 trillion going to charity.
Coming back to the topic of real estate, according to the Census Bureau, 42% of the homes in the nation are owned “free and clear” – or without a mortgage. And almost 80% of these homes are owned by those 55 or older. Thus, when we previously said that the listing inventory shortage is going to be at least partially solved by the Baby Boomers, these stats support our statement. Many Millennials and Gen x’s will inherit a boat load of money, and some will inherit houses directly.
They may choose to live in those houses, or they may sell them and use the cash to purchase another home. If they are already homeowners, they may sell their present home and purchase a larger home, or they may pay the mortgage off on their home. While there are a lot of statistics published recently regarding how expensive it is to purchase a home, there will be a lot of cash out there available to make those purchases. Here is the point. The great wealth transfer is underway right now. It will pick up steam in the coming years. And this phenomenon will affect the real estate market significantly.
Source: Origination Pro