Two of the biggest portions of the American population are over the age of 65 and under the age of 40, and this has a very, very impactful outcome on our economic position in all sectors—especially housing.
As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices. Right now, we live in a relatively tight housing market and there are more people than ever, so that creates ever-more demand for housing. In terms of just the supply of homes, we expect to see a flood of inventory over the next 20 to 30 years as the older generation passes on their property through inheritance or sells it and moves to other places.
Additionally, throughout America and the Western world, the birth rate is low. For reference, my grandfather had 27 siblings! Nowadays, however, meeting someone under the age of 40 who has six kids isn’t too common. It’s economically difficult to raise kids these days, especially given that the younger generation is relatively poorer.
"As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices."
Another factor putting downward pressure on prices is the fact that the people who would otherwise be willing to buy them have less money. It’s also a question of how much demand there is for the homes left by the older generation as they pass away (which are sometimes in bad condition).
It’s important to note that all of these factors can change. People are living longer on average. We have no clarity on how properties will disseminate to a younger generation. We also know that millennials are the richest generation. People under the age of 38 actually have more money collectively than any other generation, and they are forming households, despite the low birth rate and despite not having great economic positions. Millennials weren’t as negatively impacted by the financial crisis, and I think that they will absorb that property.
As the aging population bequeaths their assets to the younger population, we will see recessionary periods at times, but there will also be boom periods for companies and practitioners who help improve and sell those properties.
More than any other macroeconomic trend, caring for the elderly, the dispossession of their assets, and the transition from the greatest and baby boomer generations to the millennial generation will be the major trade winds of the entire global and American economy.
If you’d like to understand in more detail how this might affect you, please feel free to reach out to me. I can’t wait to hear from you!