It is no secret that baby boomers control a significant portion of the nation’s real estate wealth. Boomers own about a third of the U.S. housing wealth, according to a report by the Federal Reserve’s Survey of Consumer Finances. Many boomers even enjoy the luxury of owning a second home or a vacation property. This may come as a surprise to younger generations who are struggling to get their foot in the real estate door, watching their dreams of homeownership slip away due to skyrocketing property prices and limited availability.
Interestingly enough, there seems to be a growing trend among baby boomers when it comes to their financial priorities. A survey conducted by Northwestern Mutual reveals that only a small fraction plan to leave an inheritance to their descendants. Instead, almost half of the baby boomers surveyed by Charles Schwab prioritize enjoying their wealth while they are still alive. It seems that for many, the notion of financial legacy does not hold the same weight it once did, which leaves future generations to fend for themselves.
Comparing the economic landscape faced by baby boomers to that of younger generations paints an entirely different picture. Boomers entered the housing market at a time when housing regulations were far more relaxed. Immigration laws had not yet reshaped the nation, and cities, though declining, were manageable. In those days, suburban development was booming, and regulations were minimal. Homeownership was the attainable American dream, supported by a favorable economic and regulatory environment.
Fast forward to today, and the scenario has changed drastically. The once-touted American dream of owning a home now seems like a distant fantasy for many millennials and Gen Zers. Why? Well, it appears that the very generation that capitalized on a relaxed housing market has helped make it increasingly unaffordable. Restrictive zoning laws and the development resistance, particularly in lucrative areas like coastal California, have made it nearly impossible to build new housing. This Not In My Backyard (NIMBY) attitude amongst boomers only solidifies their control, ensuring the scarcity and expense of homes persist.
It’s a classic case of pulling up the ladder after one has climbed to the top. Young families and aspiring first-time homeowners are left gazing upwards at a housing market fortified by those who have already made it to the summit. The baby boomer generation, having already secured its place atop the real estate hierarchy, continues to implement and support policies to maintain an impenetrable barrier around its wealth. This creates a cycle where the dreams of homeownership grow dimmer for future generations, all while the boomers sit comfortably and enjoy the fruits of their labor without concern for those destined to follow.
