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Baby Boomers are just the tip of the iceberg. While millennials pin the blame on the older generations, a far less visible factor is the contingent of well financed institutional buyers who have collectively taken a lot of stock off the market. Private Equity investors and buyers have, in fact, contributed to the shortage of housing by doing what businesses in free market economies do best: identifying rising assets and acquiring them in bulk.
The way millennials perceive it, the older generations have almost all the spending power and are able to reach into their pockets and pull out over-full price offers, often in cash. This leaves the younger generation—scrambling to get together a down payment and struggling to establish credit—on the losing end of these deals. They do not have the ready cash, nor, just as often, the time or ability to jump on properties the minute they come on the market.
This is where the deeper inquiry comes in. While there is truth in these comments and more than a few clues about where things went wrong for them, millennials hold the additional awkwardness that they are often the beneficiaries of the older generation’s largesse—according to our research, almost a quarter of them couldn’t get together a down payment without borrowing or being gifted family money.
• Nearly half (48%) of non-home owning millennials are saving for a down payment
• 55% of those who are saving cannot afford to buy yet
• 12% of millennials have abandoned their plans to buy a home
• 13% of millennials considering a COVID- driven move want to be Closer to family while 8% wanted to move away from family
Accordingly, there’s a quasi-war over housing going on between U.S. millennials and the generations comprising their parents and grandparents, with many 25-to-40-year-olds caught between blaming older generations for their difficulties in becoming homeowners and feeling dependent on them for necessary financial help if they are ever to succeed. A broad new study conducted by Legal & General Group, a financial services firm and global investor, dives into the deeply held grudge millennials hold against Baby Boomers for thwarting their home buying plans.
In this latest segment of a recent research study titled “Mind the Gap: The Intergenerational Home Ownership Blues,” the study looks at the skyrocketing cost of housing and how changing intergenerational housing needs and other unseen factors are contributing to the reality of housing unattainability for many millennials. With longer healthy life expectancies than ever before, Baby Boomers are deciding to downsize but remain in privately owned housing, putting a strain on affordable housing stock just as the younger generation of home buyers want to buy starter houses. While the long-term consequences of these demographic shifts are still unfolding, the study found other factors exerting added pressure on the housing market, including institutional investment.
Long known for its diverse friend groups, the millennial generation is now experiencing significant inequality in wealth between those who are college educated and those who are not, and far worse wealth inequity between white and Black millennials. This inequality is only cemented by the probable demographics of parents and grandparents who are likely to be leaving properties and other wealth building assets to their millennial-aged offspring.
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