I feel terribly for so many buyers right now – and their agents – as they navigate the hyper-competitive, increasingly less affordable markets throughout most of the USA. Not only are they competing in a low-interest environment with significant pent-up demand, under-supply, under-building, increased consumer savings and credit scores, Spring optimism, a clear path to the end of the Covid nightmare as vaccine administration soars, inflation, rising prices, institutional investors competing with them……possibly even more daunting is GEN-NEXT, a large group of potent homebuyers reliant on inherited or transferred wealth…..and no, they are not necessarily just millennials in age.
Many of my peers in their 50’s are dealing with aging parents right now. Realistically, many of them will – and are already – inheriting from their parents as they reach the end of life. If the average US lifespan is around 80 years old, and the average age of giving birth is approaching 30 years old, you do the math. Inheritance is not something merely assigned to the super-rich. The average American has a net worth of around $177,000 at death. In wealthier cities, this number jumps automatically, often driven simply by real estate values. Regardless of the size of the inheritance, this cash infusion is often the driver of heirs to buy a home.
Wealth amongst the wealthier – not necessarily just the rich – is often distributed well before death. Sometimes this is done so for taxation and estate planning purposes, but often it is done to help kids get going in life, especially as they form families. Few can afford to gift a kid $5 million, but many more can afford to gift $25,000. Many trusts require young heirs to spend on investments, education, or real estate, not Ferraris.
My point is that while we are all clearly aware of the GREAT WEALTH TRANSFER – over $750 billion per year in the US alone – we may not be as aware that the beneficiaries will be of ALL age groups, anywhere from super-young grandkids, all the way up to those in their 70’s and older. It has started already and will grow notably. GEN-NEXT is an age-agnostic demographic!