- Baby boomers own half of all American homes. As they reach old age, they’ll sell up and unleash 21 million houses on an already frothy market.
- Millennials and Gen X can’t afford to buy the flood of homes on the market, potentially triggering a national housing crisis.
- Signs of an imminent US housing bubble are already flashing red as price/income ratio hits record highs.
Baby boomers rode the housing bubble all the way to top. And now they’re about to pop it.
A whopping 50% of all homes in America are owned by the over 55s. But what happens when they retire and downsize? What happens when they move to community homes or unfortunately pass away?
The answer is worrying. There could be an epic crisis in the housing market.
“A wave of homes for sale, hitting the housing market. A scale we haven’t seen since the housing bubble in the mid-2000s… This is homes being sold by baby boomers like myself and there’s no-one there to buy them” – Fox News.
Boomers will sell an estimated 21 million homes in the next two decades (a quarter of the total US housing market).
The problem is, Gen X and millennials can’t afford to buy them.
Millennials can’t afford to buy boomer homes
A New American report revealed that millennials earn 20% less than boomers at the same stage of their life. Wage stagnation, decline in company benefits, and a rise in contract work means millennials can’t afford the same homes their parents could.
According to Apartment List, one in five millennial renters now think they’ll be renting forever. That figure rises to one in four in Californian cities.
As real wages stagnate, house prices are running away. The average price-to-income ratio in 2017 hit 4.2 (in California it’s as high as 8). Back in 1980 it was just 3.2.