it doesn't mean anything to be workingclass 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 even inl plac 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 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 reals 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 it 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 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 take it with them when they are gone the inequality
between homeowners and renters is even worse in old age according to dat data from Lending Tree
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 to1 $8,000 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 Bane
looking to get higher Returns on real estate in 2017 Blackstone closed a $745 million deal with
the Real Estate Investment Trust well Tower 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 homes 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 Brooking study slightly more than 10% of American adults
provide some type of care to another adult usually it is an adult children caring for their parents
in an interview with the Washington Post Jan muchler a director of The gerentology 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 so it's time to learn how money Works to find out why you probably won't benefit
as much as you are hoping from the Boomers passing down their homes this week's lesson was sponsored
by revolute revolute is a global Financial super app used by over 30 million users that gives you
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the metal plan for over a year now and I love it start using revolute today by using my link in the
description 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 Freddy Mack and
Bank Ray 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 rolled 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 red fin 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 purchase 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 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
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 more 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 opport unities
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 sunb 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 133% of all residential
sales in 2021 according to a report published by the National Association of realators it doesn't
call for the stupid fing laser eyes just yet but in the sun Bel 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 sh on 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
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