What Happens to the Global Economy When All The Boomers... Die?

In the coming decades, the wealthiest generation in history will die. It's an unfortunate, albeit inevitable, fact of life. But Baby Boomers will eventually go extinct, and they will pass down over $90 trillion to the next generation within America alone. This much money could fix a lot of problems, like student debt, unaffordable housing, inadequate retirement savings, and record credit card debt.

But don't get too excited just yet, because at best, the great wealth transfer is a financial illusion, and it could actually just end up making things worse. This is a setup, a warning of the ugliness to come. The greatest wealth transfer in history is here. A familiar transfer of wealth is underway as we speak. Baby Boomers are leaving an estimated $70 trillion to Millennial and Gen X heirs.

Boomers are the wealthiest generation in history. In America, they control half of the nation's wealth, according to the 2024 Wealth Report prepared by the property management company Knight Frank. Other sources estimate that Baby Boomers only hold a mere $78 trillion in assets. That slight difference of $12 trillion is due to what you really define as wealth, and that slight difference in opinion is more than the collective wealth of half the planet.

Regardless of the exact methodology used to calculate generational wealth, they all agree on one thing: Baby Boomers are the kings, and everybody else has been holding on to whatever is left over. That concentration of wealth has, according to many, come at the expense of younger generations, who are now poorer than their parents were at the same age. So, that means when life finds a way and this wealth is passed down, it should fix these generational issues, right? Wrong.

Counting on an inheritance to fix your own personal finances is a terrible idea. According to a survey by the investment intelligence firm Nxis, 70% of young people expect to get an inheritance, but only 40% of their parents actually plan on leaving one. This means individually, 30% of the young adult population is going to have their financial plans ruined late in their careers, when there isn't much time left to make up for it.

Okay, so waiting on an inheritance is a dumb thing to do as an individual. But counting on the great wealth transfer globally is just plain irresponsible for three simple reasons.

The first is that not all wealth is created equal. $7.4 trillion of the $90 trillion total are held in private businesses, according to data from the Fed. Small operations like HVAC, roofing, machining, mortgage brokering, medical practices, and repair businesses number in the millions across America. But putting a value on them can be extremely tricky. The Fed took estimated EBITDA for these companies, which takes the earnings of a business before interest, taxes, depreciation, and amortization, and then multiplies that by an industry-standard valuation multiple. If you own a small business that makes $200,000 per year before these other costs, and you operate in an industry like machinery with an industry EBITDA multiple value of five, then congratulations, your business is worth $1 million. This is an imprecise art, and naturally, a business is only worth as much as someone is willing to pay for it, which will only cause a problem when all of these Boomer-owned businesses get passed down to the next generation.

According to the American Medical Association, 49.1% of physicians currently work in practices where the owner is themselves a doctor. That was down significantly since the start of the pandemic, and many of those left are owned by doctors that have had time to get the experience, clientele, and capital necessary to go into business for themselves. If they retire or die, their business doesn't have any value to their children unless they themselves are also doctors in the same field of medicine, an exceedingly rare occurrence. Millions of other owner-operator businesses will close their doors before they can be passed down to younger generations.

Now, this is a bigger problem than some trust fund babies not getting handed a free business. If these businesses disappear, it will not only take their services out of the market, it will also stop new entrants into the job market from getting apprenticeships to learn the trades that are already in desperately short supply. But in crisis comes opportunity. The first group that is actually benefiting from the great wealth transfer are investment firms that are buying up these small firms for pennies on the dollar from owner-operators who just want a bit of extra cash before they retire. In a process called rolling up, private equity firms are buying dozens of small businesses and then merging them into one more efficient business that can hire cheaper employees to service the clients of all the old businesses. Sites like BizBuySell, BizQuest, and BusinessBroker.net have become the eBay for small businesses, largely listing businesses owned by retiring Baby Boomers who are hoping to get something rather than just shutting them down.

There is one other problem with all this private business wealth, too. The 50 largest private companies in America are all almost exclusively owned by Baby Boomers. Without the financials of these private companies, putting an accurate value on them is almost impossible. But based on comparables, these top 50 are collectively worth an estimated $2 trillion, conservatively. So, almost half of the wealth in this asset class is just 50 companies. Unless your family name is Bloomberg, Mars, or Coke, the value of the Boomers' private companies is not something that is going to impact your life.

But that's only one small part of the great wealth transfer. Boomers reportedly owned $16.9 trillion in durables and other assets, ranging from rusty old home appliances to motor yachts. Some of these goods could be sold by a beneficiary, but a lot of this paper wealth is in reality going to end up being a financial burden to maintain, if it's not just simply disposed of. Rounding out the wealth that might not do much good to the next generation, pension plans have been calculated on what they are worth to the Boomers themselves, based on assessing how much money someone would need to replace that cash flow. A pension that pays out $50,000 a year to a retiree could have an on-paper future value of a million, but that doesn't mean that a beneficiary is going to receive a million dollars when their parents die. So, with that, the great wealth transfer has already been cut in half.

But that still leaves $4 trillion in cash, equities, and most importantly, housing, that is going to be passed down in the coming years. And that's going to fix a few things, right? Well, it's time to learn how money works to find out why the great wealth transfer probably won't change anything.

Baby Boomers' second largest asset class is their homes and investment properties. The generation owns almost as much real estate as Generation X and Millennials combined. And controlling this much of the market has caused problems for everybody else. According to a survey conducted by the real estate firm Redfin, about half of homeowners and renters said they have periodically struggled this year to afford their mortgage payment or rent as rates have increased and have been passed along to the people on the bottom of the housing ladder. The survey also found that to keep up with payments, some homeowners and renters had resorted to selling their belongings, picking up overtime shifts, canceling vacations, working a second job, and even skipping meals to keep up with their payments. Housing has simply become a major expense for everyone except for those who have had the opportunity to purchase a home when they were affordable and the time to pay their mortgage off in full.

The great wealth transfer of housing, on the surface, looks like a ghoulish, albeit pragmatic, solution to this problem for two simple reasons. The first is that it could provide millions of people with a house of their own to live in. The second reason is that even if you receive a home as an inheritance that you don't want to live in, you can just sell it, which is good for you and good for the market because it provides supply at a time when almost nobody wants to sell their home.

So, what's the problem then? Well, again, less housing than you would expect is actually going to be passed down. A study published by the National Library of Medicine has found that a majority of lifetime healthcare costs for the average person happens after they turned 65. This is an immediate problem because, according to a study by the health research organization KFF, only half of people over 65 have anything saved to pay for healthcare costs in retirement, and the overwhelming majority of adults won't have enough money to pay for senior living care, which is now estimated to be over $100,000 per year. Medicare, which is the government-provided health insurance program for seniors, does not support senior living. So, many seniors will add a Medical Care Advantage plan, which is an additional out-of-pocket expense.

So, housing will be handed down, but it's primarily going to be handed down to reverse mortgage companies or sold to cover spiraling senior living costs. According to Freddie Mac, the total value of cash-out refinances and second mortgages has already doubled since 2019, as even people who own their own home have trouble keeping up. So, so far, the great wealth transfer is going to consolidate small businesses, financialize homes even further, drive up medical costs, strain government services, and increase household debt. But there is still hope.

There is one asset class left, and it's the biggest of them all. Baby Boomers hold on to more equities and fixed-income securities like stocks and bonds than Millennials have between all of their assets combined. But when you think about it, that doesn't really make sense for most people. Their biggest asset is their home. Participation in the stock market is at record highs, thanks to investment vehicles like 401(k)s and IRAs, as well as technologies that make investing easier, like cheap online brokerages. According to the Fed's Survey of Consumer Finances, 58% of households owned stock in 2023, which is a good thing, but it's still lower than the 65% of households that own their own home. Part of this can be explained by people buying stocks because they simply can't afford housing, but that's only a minor factor.

This class of assets will actually be handed down in the great wealth transfer, but it doesn't belong to normal people. Despite record participation in the market, the richest 10% of Americans now own 93% of stocks. The bottom 50% of Americans own just 1%. Most shockingly of all, the stock market inequality is even more severe amongst Baby Boomers. Just Bill Gates, Jeff Bezos, Elon Musk, Steve Balmer, Larry Ellison, Michael Dell, Jensen Huang, and the three surviving Walmart heirs own roughly $1.9 trillion worth of stocks, or 10% of all the equities within their generation. The remaining 70 million Baby Boomers own the 90% that these 10 people have left behind.

The good news for the people in line to inherit a majority of this wealth is that they won't need to wait for it. A New York Times article detailing the way this wealth is being transferred has found that most of the advantages of the great wealth transfer have already been handed to the people in line to receive it. A growing trend of "giving while living" means that children from wealthy families, with the financial means to maintain their wealth until their death, are already getting their college paid for, assistance with buying their first home, and cash to cover the cost of raising their own children. According to a survey from the UK, nearly 80% of children enrolled in the country's private schools had at least part of their fees paid for by their grandparents.

If you are in a financial situation where you need the great wealth transfer to help you out, the great wealth transfer probably isn't going to help you. The biggest financial mistake you will ever make was being born after 1980. Homes are unaffordable. You will need a loan to go to college. Jobs are scarce, and financial meltdowns are common. If you are a young person, you have to ask yourself, is it too late for me to ever get ahead financially?

Millennials might be the unluckiest generation when it comes to economic growth. Millennials are having a really difficult time affording down payments for homes. That's everybody, and that is according to a new study. Bill Gates, Steve Jobs, Paul Allen, Steve Balmer, Eric Schmidt, and Vinod Khosla all have some things in common. These men are all tech billionaires who were born in 1955. According to the author and journalist Malcolm Gladwell, this is no coincidence. Gladwell argues that Bill Gates wouldn't have founded Microsoft if he wasn't born at just the right time. 1955 was the right time to be born if you wanted to be a tech billionaire because you would have been the right age in 1975 to capitalize on the personal computer revolution right as it was beginning.

If you were born after 1980, you were the right age to start paying five figures for college tuition, six figures for a basic home, and entering the job market after the dot-com bust, the global financial crisis, or the COVID-19 pandemic. Gladwell's original inspiration for his book *Outliers* were New York corporate lawyers. We take for granted that there's this guy in New York who's the corporate lawyer, right? I was just curious, why is it all the same guy? Referring to the fact that a surprising number of the most powerful and successful corporate lawyers in New York City have almost the exact same biography. Gladwell noticed that people describe Bill Gates' success to being really smart or really ambitious. He noted that he knew a lot of people who are really smart and really ambitious, but not worth $60 billion.

Tech billionaires are not the only group this happens to. A common and seemingly unavoidable problem with online role-playing games is that long-term players who started the game when it first launched have had time to level up their characters, collect the best gear, and build in-game fortunes. The game developer needs new players to join the game to grow their revenue base, or at a minimum, replace players that get bored with the game and cancel their subscriptions. New players will be competing with existing players who have more actual experience behind the keyboard and have higher-level characters in the game that new players just can't compete with. Nobody wants to spend their free time getting pwned on an old video game. So, developers must choose one of two options: Option one, reduce the gap between new players and old players and risk making their most loyal customers angry. Or option two, let the level gap grow so new players can't compete and let the game slowly die as it loses players.

Back in the real world, we are being faced with exactly the same challenges, and there are four big reasons why young people may never get ahead financially.

The first reason is job opportunities. Working a job is how most people build wealth. Even people who go on to be successful business owners normally get their start in a professional career where they can build up skills, gain connections, and earn enough money to go out on their own. The average age of retirement has been slowly increasing in America for a long time now, and that isn't just affecting people at the end of their careers; it's also affecting young people. If people have to work longer before retiring, then there is less room at the top of the corporate ladder for young people to move up into. Despite this, Millennials make more money than any other generation did at their age, and they are less wealthy because to access most high-paying jobs, they have been forced to work in high-cost-of-living cities. Here, they are competing with senior professionals at the penultimate years of their careers, but still aren't quite ready to retire yet. These were people who were able to buy homes in these cities before they became unaffordable. When Baby Boomers were around the same age as Millennials are today, they controlled 22% of the nation's wealth compared to just 7% controlled by Millennials. It's a chicken-and-egg scenario: older generations need wealth to retire, and younger generations need older generations to retire in order to build wealth. Nobody wins, but young people lose.

A high income is not the only component to building wealth. Making more money makes it a lot easier, but if you invest diligently for the long term and generate good returns, you can end up much further ahead financially than someone that earns more than you but saves less. Here, younger generations lose out again. Gladwell's 1955 Tech Bro theory has some problems. There are lots of billionaires in the tech space that were born long after the 1960s. Mark Zuckerberg, the apparently human overlord of Meta, is worth $97 billion, and he was born in 1984. Outliers always exist, but Zuck is the exception that proves the rule. Gates and Zuckerberg are the financial pinnacle of their generations, but Gates is still wealthier than Zuck after giving away $80 billion more to charities through his foundation. If Gates had held on to his shares in Microsoft in the same fashion that Zuck has held on to shares in Meta, then Gates would have a net worth of almost $700 billion, which would make him almost twice as wealthy as Musk.

I am not asking you to feel sorry for Zuck, but the investment opportunity difference exists for normal people from these two generations as well. Any investment made into the market from someone who started their career in 1970 would have quickly compounded, as long as they didn't sell during big downturns. The market averaged 11% returns over that time, but most analysts agree that the last century was exceptional for the market, and future returns are likely to be lower. Vanguard's projected returns for equities over the next decade are 4.1% to 6.1% annually, with median volatility of 17.7%. Vanguard is an investment manager with a financial interest in getting people into the market, so their bearish outlook would not have been made without rigorous analysis. The reason cited for the projected sluggish returns were the cost of complying with new data security and environmental regulations, greater barriers to cross-border revenue, and the lower spending power of young consumers. That's right, it's your own fault for not spending enough.

If getting ahead financially means saving $500,000 over your 40-year career to fund a nice retirement, it would be much harder if the analysts are right. Someone investing just $60 a month with 11% returns would have made $500,000 over 40 years. If you want to achieve the same amount with even the most optimistic outlook on Vanguard's projections of 6.1%, you would need to invest $250 a month for the same time. For a lot of you, it may be easy to find $250 a month in your budget, but if that's the case, you probably wouldn't be satisfied with just $500,000 in retirement. Financial planners tell people to budget 70% of their income to use in retirement. So, if you're someone who's earning $100,000 a year at the end of your career, budget to spend $70,000 a year in retirement. Lower returns means you will need more invested to generate that income while simultaneously making it harder to accumulate. With 11% returns, someone would need $650,000 to make $70,000 a year. Making that over a 40-year career would require a monthly investment of just $75 a month. With 6.1% returns, you would need to invest $1,150,000 to save that. With those numbers, you would require a monthly investment of $570. If you are making $100,000 a year, that's a big, big share of your budget, and it assumes that you will earn six figures for your entire career and never miss a contribution even once.

That sobering realization is why more young people are flocking to alternative investments with the promise of higher returns, like cryptocurrencies, NFTs, day trading, and meme stocks. Financial fraud is at an all-time high, and younger investors are the ones being most affected. Even though they are investing less, to a lot of people, it's worth the gamble when the alternative is a lifetime of sacrifice just to afford a modest retirement. This is not to talk anybody out of investing. It's one of the best tools you have to build wealth, but it's irresponsible to suggest that cutting out a daily coffee is going to make you rich. Without a high income, investing is not going to make you rich by itself. If you have an average income today, you are going to live a less comfortable life than someone with an average income 40 years ago. You will not be able to accidentally build wealth by cutting out minor luxuries. You're going to need a dedicated and fairly aggressive savings plan.

And that's the third reason why it might be too late for you to get ahead financially. I can't put it off any longer. I need to talk about real estate prices. 40% of homes in America are owned free and clear, with no mortgage. At the same time, more Americans than ever don't think they will ever be able to afford a home. Rental prices are up all over the country and across the world. Existing homeowners are allowed to write off the interest on their home loan against their income, but renters are not allowed to do the same with their rent payments. Renters can also be kicked out of their homes, and they need to absorb the cost of moving, cleaning, and paying rent on two properties for the overlap period, lest they be homeless while waiting to move into a new place. If you are a renter, this is all reducing your ability to save money, money that you need to buy your own place or do anything else to get ahead financially.

Getting a down payment together can now take more than a decade of dedicated savings in high-cost-of-living cities. And for young people that are able to overcome this hurdle, the problems only just start there. Most people cannot purchase a home in cash. They need to get a home loan, which means a place to live becomes a monthly expense. People buying housing now are going to be hit with high prices and high interest rates. Locking in a high interest rate for 30 years is going to hurt people buying their first home because it can be expensive to refinance if it comes back down. The combination of high rates and high real estate prices makes the monthly payment on the average two-bedroom apartment 20 times higher than it was 40 years ago, compared to the average salary at the time. Higher property prices also attract higher property taxes. There is not a single county in the country where someone making minimum wage can afford to rent a two-bedroom apartment without experiencing financial difficulty. Purchasing the average home and making payments will take more than 40% of the average salary, which leaves little money left over to save for anything else.

Young generations also have more opportunities to spend during their earliest years, where savings have the most time to compound over a lifetime. Online shopping, streaming services, overpriced food delivery apps, fast fashion, and the "subscriptionization" of everything wasn't a drain on the wallets of older Americans when they were starting out. There is good news, which despite the temptations, Millennials are saving earlier than their parents, and their savings are higher portions of their income. According to a study by Magnify Money, the average Millennial had their net worth doubled during the pandemic, but they were still behind older generations at the same age. They were also behind hitting financial milestones like buying a house, paying off student loans, and saving for retirement. Younger generations are struggling to earn as much, and their investments probably won't perform as well over the long term. And that's just for people starting out.

Millions of people across the world can't afford to retire, and they're doing it anyway. So, what does this mean for everybody else? Baby Boomers leaving their homes, either because they're moving to assisted living centers or they're just no longer living. In the last 10 years, Milwaukee County saw a 22% increase of older residents. In their 50s, are generally at peak earning potential, yet more than half worry they'll run out of money in retirement. Is this the retirement that you imagined? No.

No. Earlier this year, the Retirement Income Institute released a commissioned study on retirement savings, and I can't overemphasize how much I love the name of this report: "Peak Boomer's Impact Study." It found that between this year and 2030, 30 million Americans will retire, representing almost a fifth of the total labor force. The study focused primarily on how those retirees plan to fund their retirement, and the results were grim. More than half of the study group had less than $250,000 in assets, including their home if they had one, and that group would rely on Social Security as their primary or exclusive source of income in retirement. Now, this study was conducted by independent researchers, but it was funded by a group that wants to sell annuities to people planning their retirement, so some of their recommendations need to be taken with more than a bucket of salt.

However, the study group of retirees getting too old to work are just one part of the larger group deciding that right now is a pretty good time to retire. A study by Pew Research has found that the largest wave of retirement has already happened, as people stepped back from the workforce during COVID by a combination of record low interest rates, generous stimulus measures, redundancy packages, record asset prices, and a general motivation to not go back into a plague-infested office. This is far from a uniquely American trend. In fact, we are actually behind a lot of countries that are both older than us and have better support systems for people in their old age.

On top of hitting "Peak Boomer," there are less typical retirees: a growing number of independently wealthy young people who are pursuing financial independence, where investment returns from their assets are to fund their lifestyle indefinitely. And on the other end of the spectrum, there are people just giving up on working and are scraping by on family support, government assistance, or jobs in the informal economy. These people aren't the typical demographic of retirees, but they are still adding to the record trend, and they are all paying for this major financial decision in slightly different ways.

The first way is that they just aren't. People don't always make entirely rational financial decisions, whether it's buying a car in an 84-month finance deal, racking up credit card debt to buy luxury goods, or just not understanding the importance of saving and investing. There is no shortage of people doing really dumb things with their money. You are watching a channel that gives weekly depressing lectures on the state of the financial system, business trends, and the economy, so all of you are probably far more financially literate than the average person. And even then, you have probably made some dumb money mistakes.

People deciding to quit their jobs often aren't thinking entirely rationally. And more people are just accepting that if they are going to be screwed financially in their old age, they would at least like to enjoy a few years while they still have their health and worry about finances once they are too old for it to be their problem. For some people, the decision is made for them. Layoffs nationwide have hit people approaching retirement age particularly hard. According to a survey conducted by the Transamerica Center for Retirement Studies, most Americans are retiring five years earlier than they expected. While this sounds like it's giving people more years to enjoy themselves, the reality is that it's giving people fewer years to save and more years to cover, and this is almost entirely involuntary.

According to a study published by ProPublica, since 2016, 56% of workers over the age of 50 lost their job involuntarily, meaning they either got fired, made redundant, or laid off. Now, that might not sound too bad, but you have to remember that a lot of people over the age of 50 are choosing to leave their job because they are retiring on their own terms. So, the majority being let go is pushing a lot of people out of work. Once they are out, older people are finding it much harder to find a job, especially ones that pay as well as the jobs they were laid off from. Companies don't want to hire older people because they think that they can't use computers, they aren't going to be able to do physical work for as long as young workers in non-office jobs, and there is the not-so-secret reality that older workers are normally less easy to take advantage of than younger workers with their whole career ahead of them.

It's technically not legal to discriminate against workers over the age of 40, although this law does not protect against discriminating against people under the age of 40, but that's a whole separate issue. It doesn't matter anyway, because any half-competent hiring manager or human resources department could find a reason for hiring a young worker instead of an over-50 worker. And this all means the same thing: if people lose their jobs over the age of 50, they are almost forced into retirement, whether they can afford it or not.

The topic of what to do with aging populations in countries across the world is something that is keeping a lot of policymakers up at night. People are living longer and having fewer children, which means more pressure is going to be put on a smaller group of young people, or elderly people are going to have to make do with less. Of course, a lot of Baby Boomers are independently very wealthy, as they've enjoyed a high level of job security and incredible asset price appreciation over their working careers. A typical white-haired couple driving a golf cart around a gated Floridian retirement village might be the first thing you think of when you think of Boomer retirees, but these people are far from the average. People of retirement age own more than half of the wealth of the country, but that wealth is spread even more unevenly than it is over the general population. There are some extremely wealthy Baby Boomers, a small group of Boomers who will be able to comfortably fund a nice retirement, and millions who are fighting for what little is left. The question is really about what happens when this group just can't work anymore.

A study by the Stanford Center on Longevity found that even though Baby Boomers are the wealthiest generation in history, as a whole, they are still facing tougher retirement conditions on an individual basis than their parents did. Some countries are pushing back retirement ages to squeeze a few more years of work out of people before they can receive a government pension or access their advantage retirement savings accounts. Statistically, most of you watching this video are either at the peak of your career or are only just starting, which is why we have covered the problems you are likely to face if you don't already have a solid plan to retire. But even if pushing back retirement benefits is a necessary evil, it's going to be a hard sell. Retiring Baby Boomers are a large group, and they vote. The mention of them needing to work a few more years is borderline political suicide. Most plans here in America center around pushing back retirement for young people who aren't close enough to retirement yet to care. Whatever the plan is, it's not being helped by the millions of people who are dropping out of the workforce. So, the compromise is that the payments are stretched thinner.

According to Census Bureau data, poverty rates amongst people over 65 has been on the rise, as government programs haven't been able to keep up with general inflation, and certainly haven't kept up with the spiraling costs for age health, healthcare, and senior living. If people do reenter the workforce, it's normally into low-wage jobs that only help support other payments. A study conducted by the American Society of Aging found that a fifth of older workers were making less than $15 an hour, and that included people between 55 and 65 who should be at the penultimate years of their career. The authors of this study also pointed out that a lot of this low-wage work is intense, routine, and almost always highly monitored, in situations where a person controls neither the pace nor content of their work.

Now, you probably don't need an institutional study to tell you that minimum wage jobs are hard, but they are even harder on old people with deteriorating health, which means it could be hard for them to keep this work even if they really need it. When this happens, the last line of support becomes relying on their adult children for care. Now, the idea of your parents moving back in with you might be terrifying enough, but the burden of being a caregiver to elderly parents is disproportionately falling on lower-income households. Lower-income households are less likely to be able to save adequately for retirement and are more likely to have children that are also low-income. When those parents start requiring care from their children, it can impact relationships, career growth, or even how many hours the adult child can put into their work. Additionally, a dependent parent might be a direct financial burden if their assistance payments don't cover their expenses. This means the children are going to be less likely to save for their own retirement, creating a vicious intergenerational cycle.

So, what was supposed to be a feel-good story about millions of people leaving behind the 9-to-5 has turned into a lecture about the grim financial landscape that millions of people are forced to contend with. Welcome to this channel. By now, you should know what you've signed up for. But what could be done about this as a society? Not much, unfortunately. A lot of incredibly smart people are tackling the problem of aging populations, and the solution so far has been to get people to work longer and live on less. Individually, though, you need to assume that there is not going to be anything there to support you when you are too old to work. Pensions are already strained, and if you have a few decades left in the workforce, there really is no guarantee it will exist at all for you. And if it does, it's probably only going to be enough to cover the bare necessities, if that. So, try to set something aside in a 401(k) or whatever the equivalent is in your respective countries. It's basic stuff, but when so many people cannot or will not do the basics, it could put you a long way ahead.

Now, this only applies to elderly retirees. This problem is being made much worse by the millions of people leaving the workforce decades before they would normally retire. There is one big problem holding most young people back financially: housing. Housing, housing, housing. Housing has put home ownership beyond the reach for many. If you don't already own a home, you probably can't afford one, and you probably can't even afford to rent one either. If your dream is a housing crash that will level the financial playing field, then I am sorry to tell you, but that's probably only going to make things worse.

Out on a hunt for housing but feeling overwhelmed by the soaring costs? Property prices are rising across the US, and that is, in fact, in part because of these higher interest rates. Real home buyers and sellers alike are feeling a massive struggle to close deals or make money. Housing is becoming more expensive for buyers and renters alike. According to real estate data from Adam, homes are now unaffordable for median Americans in 99% of counties they analyzed. The remaining 1% were not affordable; there just wasn't enough data to use in their report. With statistics like these, the only hope that a lot of Americans have is a market correction that will bring prices back down.

High prices aren't good for many people. Buyers can't afford a home. Renters are stuck in a market where more than ever they need roommates to afford rent. And even though two-thirds of Americans own their own home, high prices aren't that great for them either. If you are one of the lucky people that own a home and you sell it for a record price, you still need to buy another home, which is just going to cost you a record price, leaving you no better off overall. While you own your home, you are going to pay higher property taxes, and if you do sell your home to buy a new one, you might have to pay capital gains. Most homes in America are now selling over the IRS's Section 121 exemption of $250,000 in profit since you purchased the home. So, if your home is worth a lot more than you bought it for and you don't want to live on the street once you sell it, the only person you have really made money for is Uncle Sam. Congratulations, you played yourself. The only people who are really winning off that own multiple properties in addition to their primary residence.

If the prices are too damn high, then the best thing you could hope for is a market crash. Right? Wrong. I am once again here to crush your dreams and tell you that a housing crash would probably only make it harder for you to buy a home for three simple reasons.

The first reason is that if you are not in a financial position to buy a home right now, a real estate crash would put you even further behind. Today, you can buy a house with as little as 3% down from lenders across the country. So, if you can't get into a house right now, there is probably something other than the down payment standing in your way. And unless house prices drop by 97%, you are going to be able to pay cash. According to the Department of Housing and Urban Development, average house prices fell by just 20% in 2008 from their peak in 2007. This was the worst housing collapse in history, so a 97% drop is unlikely. So, that means if you can't buy a house now, then even after a market crash, you are still going to need a mortgage.

According to a survey commissioned by NerdWallet and conducted by The Harris Poll, 37% of non-homeowners said they didn't have enough saved for a down payment on a mortgage. But a larger group, 42% of respondents, couldn't buy a home for a much more annoying reason: lenders want to ensure three things when you borrow money from them. They want to make sure you have a down payment, the bigger the better. They want to make sure you have good credit, and they want to make sure that you can make your payments. The systems and criteria that lenders use to determine your ability to repay a loan are made up by the risk departments at the banks and are kept private because it's considered a business secret. Normally, these rules are highly risk-averse, which is why you might get a mortgage application declined if the bank decides that you can't make repayments, even if your repayments would be less than you're currently paying in rent.

Every lender has a different set of rules, and they can change them at any time. Income from a full-time job is treated differently to part-time or gig work income. Some banks prefer income from business owners, and some won't lend anything to them. I wanted to buy a house at the end of last year, but when I told my bank that my income came from YouTube videos, they politely but firmly told me to get out of their office. Lenders also treat expenses like student loans, dependent family members, and other debt payments differently as well. All the different rules can get confusing, but they all have one thing in common: if the risk department says that home lending is getting risky, they are going to make it even harder to qualify for a mortgage to balance that risk. After a housing crash like 2008, lenders got much more conservative with who they would lend that money to, which back then was a good thing. But now, in 2024, if your income is not good enough to qualify for a mortgage now, you are going to have even less of a chance to qualify for a loan if real estate crashes.

According to the National Association of Realtors, the biggest drop ever in the number of homes being sold in America came after 2008. This should have been the perfect time for the number of home sales to jump because prices had fallen significantly, the number of listings was inflated from foreclosures, and interest rates were at record lows. But what actually happened was exactly the opposite. There were people that wanted to buy these houses, but nobody would give them any money to do it. And unfortunately, that's just the first reason.

Talking about a real estate crash is one of the most popular finance subjects here on YouTube. Videos warning you about the imminent real estate collapse have regularly been getting hundreds of thousands of views for years. Any day, they might come true. The reason these videos are so popular is because people think that if they are right, then this could be their one chance to buy a home. Some influencers even talk about the investment opportunity that a post-crash real estate market could present. And aside from the titles and thumbnails, some of these videos do make a compelling case. I am trying to be a bigger person in 2024, and I'm not going to name any names. Instead, just focus on the subject. So, I am just going to list the long list of problems you are going to face if you try to buy the dip in real estate.

For house prices to fall, one of three things needs to happen. The first thing is that buyers across the country lose their purchasing power because of mass unemployment or because banks stop lending them money to buy a home. The unemployment rate is near all-time lows, and if banks halt lending, then that's not going to help you buy a home unless you plan to pay all cash. If unemployment does rise, then young hopeful home buyers are likely to be the first people laid off. You might be lucky enough to avoid getting fired and convince a bank to give you a loan, but there are other groups who don't need that luck.

In 2011, the investment bank Morgan Stanley sent out an industry report to their clients titled "Housing Market Insights: A Rentership Society." The report opens with the bank's analysis that after the subprime mortgage crisis of 2008, the combination of falling home prices, limited mortgage credit, continued liquidations, and better rental options is fundamentally changing the way Americans live. They were advising their clients, who are either institutional investors or ultra-high-net-worth individuals, that regular Americans were being evicted, nobody could get a loan, and people that lost their homes needed a place to rent. So, it was a perfect opportunity to buy up residential property while nobody else could and jack up rents on people that had been evicted. The Morgan Stanley report was horrendously tone-deaf, but it wasn't actually wrong.

Today, the average American home earns more than the average American, which is why the second reason that housing could get cheaper is even less likely to help you buy a home. The number of existing home sales in America is once again approaching levels that haven't been seen since the 1980s, when the population was half of that today. People who have locked in low interest rates are not going to sell their homes unless they are forced to, because if they buy a new home with a new mortgage, they will be paying twice as much out of pocket every month for the same place. A report by The Wall Street Journal found that even if people needed to leave their home to move cities, they were just renting out their home instead of selling it because they could keep their sub-3% mortgage rate and charge record-high rental prices. If you own a home right now, there is no reason why you would want to sell it. A flood of foreclosures is much less likely today because lending standards are tighter than they were in the lead-up to 2008, so most existing owners should be able to comfortably afford their mortgage.

So, all right then, if people aren't going to sell the homes that already exist, we should just build more homes. This really is the answer, but according to the Department of Housing and Urban Planning, America is building fewer homes now than it was when we had half as many people. By now, I am sure you are all familiar with the problems caused by zoning, NIMBYism, and local building codes. These are all making the construction of newer homes slower and more expensive. A report by The Atlantic found that nearly half the cost of building a new home came from local rules and preferences rather than just materials and labor.

There is another, even more simple reason why nobody is building new houses, and it's also the third reason why a real estate crash won't help you buy a home. A real estate developer needs to buy land, build a home, and then sell that home and land for more than they purchased it for. It's simple, but when land is so expensive, builders can't buy as much of it to build on. Back at the peak of home building in America, most of the operating margin was in the home construction itself. Now, it's in the land. So, even if a builder constructs a house on time and on budget, they risk losing money if the market swings by just a few percent against them. Builders typically fund construction projects with development loans, which are also expensive right now, thanks to high interest rates. It's become a safer investment for developers to just renovate and flip existing homes instead of building new ones because they can turn projects around faster and they don't have to deal with as much red tape. The only thing that could slow construction down even more is a collapse in real estate values, because if land prices are falling, then...

Builders are not going to risk holding on to lands to build on. If you look at the data collected by the Department of Housing and Urban Development, you can see clear drops in new construction lining up with drops in home prices. Millions of people, particularly young people, not being able to afford a home is one of the biggest problems in America and a lot of other places around the world right now. But waiting for a crash to fix your problems will probably leave you very disappointed.

In the last 400 years, real estate has gone from being owned exclusively by Elite Noble Lords to something that the average family could buy. And now, it's becoming so expensive again that only Elite landlords could afford it. There are institutions operating in America today that are responsible for over 20,000 premature deaths, all in the name of profit. They make their money by housing vulnerable people and cutting costs wherever they can, often breaking the law in the process. These might sound like for-profit prisons, but I am actually talking about nursing homes. Although maybe that's no coincidence, because a lot of these places are owned and operated by the same people. Every nursing home across the country, according to a recent survey, 87% of providers are facing staffing shortages. You trust nursing homes to take care of your loved ones, but two News investigates found several in our area have received below average rankings and exposed insulation in the bathroom. Nobody should have to live like this.

If you are an investor with a lot of cash and good connections, age living is an attractive business opportunity. The aging population means that you will have an ever-growing number of customers. Revenue can be sourced from insurance companies, individuals, and the government. And once you have residents in your homes, it's unlikely that they will ever check out until, well, they check out. According to research done by the National Bureau of Economic Research, elderly Americans are also less financially literate, which means they won't know if they are getting a good deal or not. The investment potential gets even better the more of these businesses you own, because overhead like administration, sales, and contracting can be shared across multiple locations. Consistent cash flow, a growing customer base, and synergies at scale has made nursing homes one of the most targeted alternative asset classes in America. Investors can now gain exposure to the age care market through direct investment, private equity, and even exchange-listed real estate investment trusts that can be purchased by anybody with a Robin Hood account and $90.

But the reality of this business is roaring margins, distorted incentive structures, and a race to the bottom on quality and safety. Age care is a broken business model that smart money investors need to squeeze incredibly hard to get any kind of returns for three reasons. And there are three terrible ways this squeezing is getting done. The first reason is that the profit does not come from looking after the elderly. The National Bureau of Economic Research published a report on the effect of private equity investments into nursing homes, which is one of the most damning things I have ever read. The only reason why it isn't getting more attention is because the report is 30,000 words long, so I have gone ahead and read it so you don't have to. The paper outlines the damage that the private equity business model has done to patient care, but before it even gets to that, it outlines just how broken the age care business is.

Not all senior living is made equal, and the businesses operated off three classifications that have different requirements and qualify for different subsidies. The first classification is an independent living facility. These are for seniors who are largely independent but want to live in an environment where they have the community of other seniors, the convenience of having meals, transport, and social events organized for them, and the peace of mind of care facilities being close by if they need them. These kinds of facilities are common in lifestyle retirement states like Florida, and some of them offer luxurious accommodations and amenities to the residents. These age care facilities are usually privately funded and operate not too differently from a community that only allows people above a certain age to live there. Investors in these kinds of facilities make their money by selling or leasing homes directly to residents, leasing commercial properties to businesses that want to operate within the facility, and from charging management fees on top of the fees to maintain grounds, organize activities, and upkeep amenities. Since residents pay out of their own pocket to live in these facilities, the operating companies can charge as much as people are able to pay. A luxury home at The Villages, the largest independent living facility in the country, is currently listed for just under $2.4 million. That is separate from the ongoing fees to stay in the community. More modest offerings for a smaller independent living facility run about $5,000 a month for combined rent and services fees on a one-bedroom apartment. Most retirees fund their stay at these living facilities by selling their homes, so as homes have become more expensive, the prices of these facilities has kept up at almost exactly the same pace. Independent living is, in a way, an indirect way to profit both off the aging population and increasing home prices. So if you are waiting for for an inheritance to finally own your own home, I'm sorry to tell you, but these guys are the first in line.

Now, these facilities are made for people that are mentally and physically fit enough to live by themselves, so nobody is being forced into these homes. But it starts to get a lot worse at the next level up. Assisted living facilities provide more personal care than independent living facilities. Accommodations in these types of age care establishments are much smaller than the regular apartments or freestanding homes in ILFs. Typically, they are single, en-suite rooms that connect directly to communal facilities like food halls and on-site medical facilities. These homes support residents with daily activities like bathing, dressing, and medication management, but they still let their elderly clients maintain as much independence as possible, with planned shopping trips, leaving to go to see friends and family, and even vacations if it's deemed appropriate. These types of facilities are still mostly paid out of pocket by residents, but since they are a blend of a home and a care facility, insurance companies will cover part or some or all of the fees to stay in these homes if the residents have coverage. In very rare cases, residents can also receive funding from Medicaid if it's determined that they need the support of one of these homes and they have no other way of paying for it.

At this level of care, there are two problems that arise that lead to bad outcomes for both residents and staff. The first problem is that insurance providers have much more negotiating power on their pricing, so investors in these facilities can't increase their margins by charging more. Instead, they turn a profit by lowering their standards of care. The National Bureau of Economic Research study found that since for-profit assisted living facilities had no required staffing levels, the headcount of on-site nurses and nursing assistants fell to dangerous levels. The basic functions at these facilities, reported to offer to patients like bathing, regular medical checkups, and even providing food, have been missed because of inadequate funding. A report by the Associated Press listed hundreds of incidents of residents in these facilities simply starving to death. Another report by The Washington Post found that just dozens of elderly patients in the care of these homes died after they simply walked away without being noticed by the skeleton staff running these homes.

If a long history of deadly negligence wasn't bad enough, this business model gets even worse since a large share of these residents in these homes were placed there against their will. The age care advocacy group My Elder recently published a story about Max Kaplan, an 80-year-old man who in 2011 went into a hospital to receive a minor surgical procedure, which led him to never seeing his home again. According to the report, the hospital told Max that for them to discharge him back to his home, he would have to agree to allow a social worker to visit his home and determine if it was safe for him to return. The social worker determined his own home was not good enough and put him into the custody of Adult Protective Services, which checked him into an assisted living facility to provide him with care that he was living without before his ill-fated hospital visit. Kaplan was later appointed a legal guardian by a New York Court, who sold his home and furniture, cashed out his retirement savings, and used the money, in addition to his pension and Social Security, to pay for his continued care in an assisted living facility. Kaplan is only allowed $50 a month of his own money to pay for incidentals. As of September 2023, when this article was published, Max is not allowed to leave the building for any reason. No one can sign him out, and his guardian was not responsive to requests for comment.

Now, you might be thinking this sounds a lot like the movie "I Care a Lot," something that sounds like an overdramatic work of fiction. But guardianship abuse happens all the time, especially to elders who have had a lifetime to amass assets worth siphoning off. With a literally captive market, assisted living facilities have very little business pressure to increase their quality of care because a resident seldom have the ability to leave and find a better provider. The price of assisted living facilities has also grown as facilities have started to offer additional amenities, nicer food, bigger rooms, and more activities to residents that have better insurance coverage or money from retirement savings and home sales to pay out of pocket. These are mostly high-margin items that can be charged at a premium within assisted living facilities to increase revenue because residents have nowhere else to spend their money. It's easier and more lucrative for operators to upsell these services rather than charge more money for what is really needed, which is more staff.

And that's the second reason why senior living care is a broken business. It's getting squeezed from all angles. In 2021, a group of Florida healthcare providers urged the FTC for assistance with anti-competitive pricing coming from staffing agencies. So the operators that have been accused of ripping off residents were themselves complaining about being ripped off by service providers. According to data from Salary.com, ZipRecruiter, and Indeed, the average salary for a full-time elderly caregiver here in California is between $23.40 and $182 an hour, or $28,000 to $339,000 a year. That is a terrible income for such a demanding job. So when demand for essential staff peaked during COVID-19, the companies that provided staff to facilities that didn't hire their own staff started charging more, which made it unprofitable to run assisted living facilities. Insurance companies won't pay more. Medicaid has a fixed reimbursement that hasn't been adjusted to keep up with inflation, and facilities are already milking as much as they can out of residents with means to pay for additional services. That's why a survey conducted by the Florida Healthcare Association found that 59% of assisted living facilities were operating at a loss or negative total margin.

And if you thought that was bad, then it only gets worse for the third type of age care facility. Skilled nursing facilities offer the highest level of care to residents with serious health conditions that require constant supervision. These homes are a blend of living accommodations and a hospital and are funded through fixed Medicare payments or health insurance. Some of the largest age care communities in America will have independent living, assisted living, and skilled nursing facilities all on a single property, so residents can move between them as their need for care increases as they age. Normally, residents don't spend very long in skilled nursing facilities before they are either moved back to assisted living if their health improves or the morgue if it doesn't. The regulatory requirements around minimum staffing to run these facilities is very high, but revenue is even lower. Since by the time most of the population gets to a skilled nursing facility, they don't have any personal assets or insurance coverage left, so providers have to make do with Medicaid, which isn't enough. Since most providers are still run for profit, it's taken some very creative business practices to get money out of these facilities, which is the third reason why everything about age care has gotten so bad.

There is still a lot of money in age care; it's just not in the operating homes. The National Bureau of Economic Research paper outlined one highly controversial practice that private equity firms have been using to extract business value out of all three types of these facilities. Private equity funds are motivated by capital gains, so if they can acquire a struggling age care company and turn it around, they can make large profits. And even if they can't turn it around, they still have some tricks up their sleeves. So if you're a cunning private equity manager who wants to cash in on the misery, here is what you have to do. You need to find a nursing home that is struggling with profitability but still has a strong asset base. Some nursing homes own their own facilities, and these are a great target. Since the company is barely profitable, you should be able to buy it for not very much money. And once you can take ownership, immediately sell whatever assets you can and then lease them back to the companies you sold them from. The REITs that you can buy on a public market get most of their properties from buying and leasing back properties like this. With this pile of new cash, you can pay back your firm a good amount of the money that they spent on the acquisition in the first place. After this, you should buy more properties and then use your market dominance to drive down expenses wherever you can and squeeze out a profit. Once you have made a profit, you can use this to get the age care facility to take out a loan and then use that money to pay back your firm even more. The ongoing expenses of age care facilities are now strained by rent and loan repayments, but even if they end up bankrupt, your firm still has made most of its money back. Leverage buyouts like this have been responsible for 20,000 premature deaths in facilities across the country as the quality of service is slashed in the name of turning a profit. But without the liquidity provided by private equity, there would probably be an even bigger shortage of age care providers. Private equity isn't moving into age care because it's a great business; they are moving in because it's a struggling business.

Other firms have found that there is more profit in buying up companies that provide third-party services to these homes. In 2018, H Capital acquired Reliant Rehabilitation, one of the largest providers of contract healthcare services in America, providing nursing staff on a contract basis to hundreds of assisted living and skilled nursing facilities across the country. This complemented their portfolio nicely, as they were able to share administrative overhead with Wellpath, another healthcare service provider they acquired in 2013 that provides the same services to private prisons. I have worked for nearly half a decade in investment banking in the healthcare sector, putting these kinds of deals together. They don't always have to have such bad outcomes, but with such vulnerable people right in the middle of conflicting corporate interests, they are usually the first group to be compromised.

It doesn't mean anything to be working-class or middle-class anymore. The only thing that matters is if you own a home or if you don't. The home you live in now statistically makes more money than you do. And the last hope that a lot of young people have to catch up is getting a house gifted to them by a relative. Which begs the question, what happens to the real estate market when all the Boomers die? Anyone looking to buy a home right now is facing a double challenge. Amid the Federal Reserve's efforts to slow inflation, that even in places where houses are usually expensive, they seem even more expensive. Housing is becoming a luxury that the majority of first-time home buyers cannot afford. There is an old saying that the best time to start investing was 30 years ago. The second best time is right now. But that conventional wisdom might not hold up in today's market. Buying a home at the right time could set you and your family up for financial security for the rest of your life. The only thing is, the right time was when you were still in school. And if you try and buy a home now, you will be taking on record-high interest rates, record-high prices, and record-low availability all at the same time.

People sell homes for two reasons: because they want to, and because they have to. Nobody who already has a home wants to sell it because most Americans have been able to lock in record-low interest rates. If they sell their house and buy another one, they will get a new mortgage at interest rates which will triple their payments on a home of the same value. According to data from the National Association of Realtors, 87% of new home purchases are made using a mortgage, and the average down payment of a first-home buyer is only 7%. That means higher mortgage rates are worth avoiding at all costs. A report by The Wall Street Journal found that even when homeowners moved interstate, they would hold on to their homes and rent them out, and then rent another house to live in. Everybody that wants to sell their home is waiting for interest rates to fall. Everybody who wants to buy a home is also waiting for interest rates to fall. And everybody who is stuck renting is being forced to compete with people who already own a home but don't want to sell because they have locked in a sweet interest rate. The players in the real estate market are stuck in a Mexican standoff, but the renters are stuck fighting with a banana. The only hope for people who just want to buy a home is to get it off someone who needs to sell.

According to another report published by the National Association of Realtors, the average home seller in America was 60 years old. At that age, one of the reasons people need to sell their home is because they are dead. But if you are holding out hope that the biggest home-owning generation in America, downsizing, will make it easier for people trying to buy their first home, I am here to do what I do best and crush your dreams with facts and figures. There are three reasons why older generations permanently exiting the above-ground real estate market isn't going to make it easier to buy a house. The first reason is that they can't take it with them when they are gone. The inequality between homeowners and renters is even worse than old age. According to data from LendingTree, 8 out of 10 Americans aged over 65 own their own home, and only 19% of those still have a mortgage. The fastest-growing reason why they are selling their homes is not because they are dying; it's because they need money to pay for retirement living. A report by The Washington Post found that the annual cost of nursing homes has gone from a median of $65,000 a year in 2004 to $118,000 a year in 2020. When the article was published, conditions in nursing homes have also been getting worse, as it's one of the fastest-growing asset classes for private equity companies like Blackstone and Bain looking to get higher returns on real estate. In 2017, Blackstone closed a $745 million deal with the Real Estate Investment Trust Welltower to buy its portfolio of 3,400 age care units. Blackstone's holdings are growing, but they are dwarfed by other private equity firms that have raised billions directly into age living because they know how much value it offers investors. By cutting costs and raising prices, these companies have generated exceptional yields off real estate developments that cater to a growing market of elderly Americans. Most Americans don't make $108,000 a year, and even fewer can afford that much in retirement. So people are selling their homes to pay their fees to these facilities. Private equity's role in buying up single-family homes away from regular families is overstated, but they have realized that they don't even need to own the homes to benefit from their value. States where home prices were highest had the most expensive age care facilities because elderly residents in those states have more money to pay for it after selling their home. People that can't afford to pay these fees are relying on limited Social Security and their own family and friends to support them when they can no longer physically work. According to federal data and a 2020 Brookings study, slightly more than 10% of American adults provide some type of care to another adult. Usually, it is adult children caring for their parents. In an interview with The Washington Post, Jan Muchler, a director of The Gerontology Institute at the University of Massachusetts, said that when an adult child takes on those roles, a lot of times they have to give something else up, and sometimes that's some of their work or all of their job. So if you are waiting for that inheritance to finally buy your first home, it's just as likely that this wealth will be sucked up by private equity companies before it gets to you. And that's just the first reason.

The average age of a first-home buyer in America is now 35 years old, up from 33 years old in 2021 and just 30 years old in 2010. A survey of young home buyers conducted by Freddie Mac and Bankrate asked why young people were waiting until later in life to buy a home. I probably don't need to tell you that the number one response was that people wanted to buy their first home sooner, but they couldn't afford it until they had paid off their student loans, progressed in their career, and had dedicated years of saving a down payment. New financial products that offer home lending with lower down payment requirements have been ruled out by banks, non-bank lenders, and the government as an answer to this problem. The average down payment of 7% means that some first-time home buyers are contributing significantly less to their first purchase by using products like the Federal Housing Administration loan insurance, which allows first-time buyers to put down as little as 3% of the purchase price plus closing costs. Companies like Zillow are taking this a step further with plans to roll out 1% down payment financing to eligible home buyers nationwide. If you are someone who wants to buy their first home, these offers may look like they are there to help you out, but they are actually just making the problem even worse. The only people these lending products are really helping out are the people who already own multiple properties, which according to Redfin, are mostly Baby Boomers who own $18 trillion worth of real estate. According to the disclosures of these loan products, most offers have a limit on the total loan size that can be taken out. These products are meant for first-time home buyers who want to buy a basic home, so that's fair enough. But all that it really does is pump up the price of affordable homes until they become unaffordable again in an even worse way. What these loan products do is move the financial bottleneck from the down payment to the repayments. Just because someone can get into a $750,000 house with only $10,000 down doesn't mean they'll be able to afford the repayments. A down payment is a one-time expense, but repayments on a house that is more expensive than it should be because of a loan product like this have to be paid every month for the next 30 years. The only real winners are the people that purchased these homes when they were a quarter of their current value and can now sell them to buyers with risky financing.

And that's the second reason why Boomer retiring from life isn't going to make it easier for you to find a home. It was never a matter of age. According to the US Census Bureau estimates from 2016, the number of families with children who own their own home decreased by 3.6 million in the 10 years prior to the survey. Families with children were preferring to rent either because of the flexibility it offered or because they could not afford to buy their own home. Families that own their own home also have fewer children on average, and the overall national home ownership rate has decreased by 3.4%. However, the small number of families that own multiple pieces of real estate as rental properties or holiday homes is growing. According to the 2022 Federal Reserve Survey of Consumer Finances, only 6% of Americans own property that they inherited, and only 3% live in a property that was passed down to them. The other homes are being kept by a small handful of children from wealthy families as investment properties, often in addition to the homes that they already own themselves. So if you think you just need to wait out the Boomers to finally afford a home, unfortunately, the statistics say that their estates are only going to become or concentrated in the hands of fewer people. Their age doesn't matter, but their wealth does.

An article by Bloomberg surveyed people with adult children and found that a majority of respondents reported draining their own retirement savings to support their children who are struggling to afford a home to live in. Some families are going to leave multiple homes to a few children. Some families are going to make big sacrifices to help their children. Some families don't have enough to help at all. And some families are going to need support from their children. If you are not a part of the first two groups, then you are going to be even further behind when assets are passed down from older generations. And that's the third reason why you shouldn't hold out hope for a flood of new houses hitting the market when all the Boomers die. They aren't leaving houses for you.

A 2017 census report found that a third of counties in America were experiencing more deaths than births. States like Florida have a lot of old, wealthy retirees that have displaced normal families in certain communities. The homes that are being left in these areas don't have the amenities that first-home buyers want, like access to job opportunities or good school districts, because retirees pick places to live to avoid these things. If the people who inherit these properties don't want to live in a community full of retirees, they can either sell the property or rent it out. If they sell the property, it will add supply to the housing market, but it won't be in an area where a first-home buyer wants to purchase. According to the State of Housing published by Harvard University, institutional investors have seen this gap and are targeting affordable homes, especially in the Sun Belt, because they offer a good risk-adjusted return on investment. The role of institutional investors like private equity firms in the real estate market is almost always sensationalized, but they account for 13.3% of all residential sales in 2021, according to a report published by the National Association of Realtors. It doesn't call for the stupid laser eyes just yet, but in the Sun Belt counties that they are targeting, they are an even larger share of buyers, and they have moved the market. So Baby Boomers are going to leave their homes behind, but they will mostly be leaving them to their already wealthy children or institutional investors. Probably not the story you wanted to hear, but I couldn't give up on an opportunity to shatter your dreams to get 2024 started on the right note.

These desperate times are calling for desperate measures, which is why more smart and well-educated people than ever are falling for scams that offer the vague hope of lifting them out of the rat race. This has been a common theme of hard times for thousands of years. And to see why, go and watch my new video over on how history works to find out why fraud never changes, but we keep on falling for it. If you are not already one of the 10,000 people subscribed to my totally free email newsletter, Compounded Daily, you should check it out because myself and some of the best finance creators will be releasing major articles in the new year that will be posted there exclusively. So if you're not already subscribed, follow the link in the video description to keep on learning how money works.