Millennials have had the financial rug pulled out from under them repeatedly since they entered adulthood. It started in 2008, with the Great Recession. Then came a decade of stagnant wages. Then came the pandemic and its subsequent housing market upheaval that continues to shut younger families out from the wealth-building path of homeownership.
Looking ahead, however, Millennials are poised to benefit — rather unequally —from their Boomer parents passing down wealth to their children.
According to a new report, Millennials will become the richest generation in history over the next 20 years, to the tune of some $90 trillion worth of assets inherited from the Silent Generation and Baby Boomers.
Of course, that's great news if you already come from an affluent family, in which case the influx of wealth is probably just icing on the cake. (In the United States, the estate tax on inherited wealth doesn't kick in for anything less than $13 million.)
So once again, congrats to the already rich, and condolences to the rest of us who will continue to toil under the indignities of late capitalism.
Boom times
The shift, according to the Wealth Report from global property consultant Knight Frank, is largely thanks to real estate.
Empty-nesters in the US are sitting on massive properties that they are reluctant to sell — partly because of the low inventory and high borrowing rates that are keeping all sellers on the sidelines, and partly because Boomers just really like big houses. That fact is making it even harder for Millennials with young families to break into the housing market.
Empty-nest Baby Boomers own 28% of large homes, while Millennials with kids own just 14%, according to a recent Redfin analysis. Gen Z families own just 0.3% of homes with three bedrooms or more.
"Boomers love their homes," Sheharyar Bokhari, senior economist at Redfin, told CNN. "Even if they did want to sell, it is now prohibitively expensive for many Millennials."
This is a change from the historical norm. Even just a decade ago, young families were just as likely as empty nesters to own large homes.
Interestingly, the Knight Frank research also showed that affluent young people are less likely to view real estate as the wealth-builder that their parents relied on.
"The low interest rate environment and impressive growth in house prices over the past 15 years is unlikely to be repeated in the next 15," Mike Pickett, director of Cazenove Capital, said in the report.
He pointed to a new "diversity of opportunity" to building wealth among younger generations.
"It goes beyond a simple shift of existing wealth," Pickett said. "First-generation wealth creation is on the rise, as is the array of entrepreneurial routes to create it."
(Note to self: Stop procrastinating — just go ahead and launch that YouTube channel you've been snoozing on and let the cash pour in.)
Other fun/distressing tidbits from Knight Frank's research:
- The number of ultra-high-net-worth individuals — defined as those with a net worth of $30 million or more — was up 4.3% in 2023 from the year before.
- North America saw its share of the ultra-wealthy grow the most of any region, rising 7.2% from last year.
- This group of uber-wealthy needn't suffer from loneliness while counting their millions up on Mount Must Be Nice. Their ranks are expected to increase by 28% over the next five years.
CNN Business' Anna Bahney has more.
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