Meredith Whitney, deemed the “Oracle of Wall Street” for successfully calling the financial crisis, says home prices are likely to fall substantially, and the reasons have to do with habits picked up by young guys.
“You have men staying single longer…and then you have what I call a growing crisis of the young American male…they’re twice as likely to live at home than women. So one out of five young men live at home with their parents, and these aren’t young men going to college and coming home for holiday breaks, these are young, grown men choosing to live at home,” Whitney told CNBC this morning.
The outcome could have profound effects on the housing market, she said.
“I think you’re going to start to see housing prices begin a multi-year/decade decline, just due to supply/demand dynamics,” Whitney said. “So you’ve had a demand, supply imbalance: more demand, less supply. And I think that’s going to invert.” So what that means is supply will then outweigh demand, which is why she sees home prices falling for years.
Whitney’s take is based in part on demographic shifts. The bulk of housing is owned by people and households over the age of 40, she said. But household formations are the lowest they’ve been in more than a century, which translates into a demand problem, she said today.
Yet many experts have predicted that home prices will only continue to go up from here. Mortgage rates reached a two-decade high last year, and people were still buying homes—and because there simply aren’t enough homes, demand outweighs supply, keeping home prices high. Whitney, however, is calling it differently as shifts within the housing world, and apparently among young male adults, occur. It’s not clear what data she is referring to here or in the information above.
Whitney argued that lower-than-ever interest rates “ballooned inflation, and particularly housing inflation,” which has priced so many people out of the market. “If you’re single, the chances that you’re going to be able to afford a home on your own is less likely than if you’re a dual-income family,” Whitney said. Then she goes on to say that homeowners hold much more wealth than non-homeowners.
Whitney has long discussed a “silver tsunami” set to strike the housing market as baby boomers age and their homes are freed up. “You’ll see a supply-demand dynamic shift,” the founder and CEO of Whitney Advisory Group previously said, echoing her claims today.
“Normally you would think as rates go up, home prices would go down, and that hasn’t happened over the last two years,” she said. “I think home prices will normalize because as more inventory, more supply comes on the market, you’ll see a true clearing price that is lower than it is today. So I would say 20% lower than it is today.”
Home prices rose 6% in January; a lot of people think they’ll keep going up. In January, Goldman Sachs predicted home prices will rise 5% this year and 3.7% next year. In March, Capital Economics predicted home prices will rise 5% this year. This month, CoreLogic predicted they’ll increase by 3.1% this year (from February 2024 to February 2025).
Toward the end of last year, Whitney said 51% of people over the age of 50 are set to downsize to smaller homes, citing an AARP report at a conference, and it would bring more than 30 million housing units to the market. More supply, or better said, supply that outweighs demand, would trigger a drop in home prices.
However, this concept of a “silver tsunami” has been widely refuted. A recent analysis from Freddie Mac revealed that the 9 million homes set to come onto the market in the next decade as baby boomers age aren’t going to really disrupt the market. For one reason, younger generations will enter at the same time—meaning housing demand will continue to rise. “Some have warned of a ‘silver tsunami’ as aging boomers look to sell their homes, flooding the market with inventory,” the Freddie Mac report read. “But as this analysis demonstrates, the tsunami is more like a tide, bringing a gradual exit that will mostly be offset by new entrants.”
Additionally, Eric Finnigan, vice president of demographics for John Burns Research and Consulting, recently told Fortune that baby boomers aren’t going to crash the market because they’re powering it. His team found it takes about four deaths to equate to one home listed for sale (because a partner might hold onto it, or it may be passed down to children). The number of homes listed for sale due to deaths is rising, and it will continue to, but “it’s not a deluge,” Finnigan said. “It’s not a tidal wave of homes being listed for sale because of all these dying baby boomers.”
Millennials will become the richest generation in history once their parents have died, according to a study.
The research showed that those deemed to be in the millennial generation are set to massively benefit as a result of their baby boomer parents, with one in three in this age group said to have built up significant wealth over the course of their lives. This is mainly in the form of property but also can be as shares and bonds.
Data collated by estate agents Knight Frank found that those born between 1980 and 1994 will be in for a “massive transfer of wealth and assets” in their lifetimes, with the majority of these transactions happening across the next 20 years. This transfer of equity will make that age group the wealthiest ever born.
The report said: “When the silent generation (born from 1925 to 1945), the baby boomers (1946-1964) and the oldest cohort of Generation X (1965-1979), die, £2.5 trillion in wealth tied up in their homes will be freed up.”
The estate agent’s annual wealth report added that the transfer of finances to younger people means the housing market will drastically change as the new generation comes in and changes the scope of what is seen as a desirable home.
Millennials are expected to seek greener homes, plus will “buy more environmentally friendly goods and make more sustainable investments.”
Liam Bailey, global head of research at Knight Frank, said: “The implications for investment managers and financial advisers, or for anyone else working with these new cohorts that will become wealthier, will be quite significant.”
An analysis by Savills last year found that over-65s have £2.588 trillion in equity tied up in property – £2.183 trillion in residential properties and £405 billion in rental – and only £147 billion in mortgage debt.
The impending departure of baby boomers from the housing market will undoubtedly leave a mark, but the winners in this scenario appear to be Gen Z, while millennials struggle.
NY Post composite
In the US housing market, one generation looms large: the baby boomers.
With a staggering $19 trillion worth of real estate under its belt, claiming 41.6% of the real-estate wealth in the country, boomers have shaped the landscape, creating a housing shortage and driving home prices to unprecedented heights.
However, as this generation ages, a pivotal question emerges: What happens when boomers pass away?
According to projections from the Census Bureau, by 2040, the population of 80-plus-year-olds is expected to more than double.
And as boomers leave their homes due to various reasons, a potential “silver tsunami” of available homes could flood the market.
Some economists predict that this influx might lower prices, creating opportunities for younger generations, particularly Gen Z.
Gen Z, poised to enter their prime homebuying years around 2030, could reap the benefits of this changing tide. With many boomers downsizing in later life, the surplus inventory might include starter homes that are in high demand, but scarce in today’s market.
While millennials may experience some benefits, they are likely to be well past the typical age for first-time homebuyers. Economic challenges and the need for substantial updates to aging boomer houses could hinder their prospects.
Despite efforts to forecast the real estate market’s moves, the one certainty lies in demographic patterns.
Historical data indicates that boomers will start aging out of their homes around 2030.
Zillow estimated that more than 20 million homes would hit the market over the following two decades as a result.
These homes will “boost the supply of housing on a magnitude comparable to the fluctuations that new home construction experienced in the 2000s boom-bust cycle,” the report, written by Issi Romem, said.
But the predicted “silver tsunami” may not be as tumultuous as some anticipate, with experts suggesting a gradual and manageable shift in the market.
Gary Engelhardt, a professor of economics at Syracuse University, suggests that the boomer sell-off will contribute to an excess supply of about 250,000 homes annually until 2032.
However, this figure is relatively small compared to the total sales of existing homes.
“In the next 15 years, this stuff’s really going to start happening,” Engelhardt told Insider.
In this changing landscape, Gen Z emerges as the generation in the driver’s seat.
Unlike millennials, who faced economic challenges and intense competition from boomers, Gen Zers stand to benefit from a more favorable market. Their reduced competition from boomers and a smaller cohort size could ease the pressure on the housing market.
As of 2022, a staggering 79% of baby boomers owned the homes they lived in, compared with 52% of millennials and more than 26% of adult Gen Zers, according to a Redfin analysis.
“I don’t know that millennials will be that generation who benefits” from boomers’ departure, Jessica Lautz, the deputy chief economist and vice president of research at the National Association of Realtors, told Insider.
Thirty percent of 25-year-olds owned their home in 2022, compared with a 27% rate for Gen Xers at the same point in their lives, according to Redfin.
Millennials, meanwhile, were still struggling to catch up with their parents.
Redfin found that 62% of 40-year-olds owned their home in 2022, down from a 69% rate for boomers at the same age.
The oldest Gen Zers will be in their 30s in 2030, within the prime years for first-time buyers, Odeta Kushi, the deputy chief economist for the title company First American, told the outlet.
While some speculate that the homes left behind by boomers may need updates to appeal to younger buyers, the potential benefits for Gen Z in terms of supply and demand dynamics are evident.
As the torch is passed to the younger generations, demographic projections hint at a brighter future for Gen Z and, eventually, Gen Alpha.
The housing market’s transformation may not be a silver bullet for the broader housing crisis, but it presents a unique opportunity for the fortunate and savvy younger siblings of the millennial generation.
Sorry, millennials.
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we millennials have never learnt how to keep house
A couple of weeks ago, visiting my mother’s house, I picked up a book on the kitchen table – Clean and Green by former Great British Bake Off winner Nancy Birtwhistle. It was a revelation. You can make laundry detergent from conkers, says Birtwhistle. You can whiten yellowing pillow covers with citric acid and table salt. Bicarb can be used for almost everything: smelly clothes, stained tea mugs, sticky labels on jars, you name it. You can freshen up the dishwasher by throwing in a couple of lemon halves (in a bag to catch errant pips) and then running it hot, explains Birtwhistle, who adds that she always does this before she goes on holiday (“Darling, come on, have you got the passports?” “Hang on, just popping the lemons in the dishwasher!”). Her list of how often one needs to do certain household chores was mind-blowing. Wooden spoons need to be sanitised once a month, instructs Birtwhistle; ovens should be deep-cleaned twice a year. Windows should be cleaned every month (what?), while loos and dishcloths should be cleaned every day.
How does one learn this stuff? How have I reached my age without knowing more? It feels sluttish, in the old-fashioned sense of the word, to have drifted through life buying Dettol to wipe my kitchen counters down after making supper but not thinking much beyond that.
Presumably this is why Mrs Hinch and other “cleanfluencers” have taken off on social media. Very few of us have been taught that white vinegar can clean the spots of rust on a shower head, or that a toothbrush is a useful implement to clean skirting boards. If only we still were. There’s endless discussion nowadays of the benefits of mindfulness and meditation apps to try and calm everyone’s raging anxieties, but do you know what’s mindful and meditative and easy to do from home without downloading an app? Buffing your window panes for three hours.
The retort from some to the accusation that millennials can’t keep house would be that they can’t afford a house in the first place, given the property market. Fair point. There’s less impetus to look after somewhere that isn’t yours. When are we supposed to find the time, others might wail. I know, I know, it’s very tricky given our jobs and all the hours that we need to spend on social media, watching clips of cats doing something amusing and improbable with a mop.
But I would still recommend giving the window thing a go. Heck, housework is even becoming fashionable. This week, Harrods started selling a £4,000 ironing board, which claims to cut ironing time in half, emits “hygienic steam” and comes with a keychain made of Swarovski crystals.
“Perhaps next you can tackle your oven,” my mother remarked when I reported back about my shiny windows. Baby steps, I replied. I’ve bought myself a copy of the Clean and Green book, although now I flick back through it, I realise I should have used washing-up liquid and vinegar instead of buying glass cleaner from the supermarket. Next month, Nancy, I promise.
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