A massive wealth transfer is on the horizon, with trillions of dollars in home equity shifting from Baby Boomers to their kids.
A Trillion-Dollar Transfer
Freddie Mac reports that a staggering $17 trillion in home equity is poised to change hands. That’s half of all US home equity, currently held by the Boomer generation (those born before 1964). The majority of Boomers – about 75% – plan to leave their homes or the sale proceeds to their children and families.
How Did Boomers Accumulate So Much Wealth?
The report highlights several factors contributing to this massive wealth accumulation:
- Fixed-Rate Mortgages: A huge majority of Boomers with fixed-rate mortgages agree that they helped them build wealth steadily over time.
- Low Mortgage Rates: Many Boomers either own their homes outright or have incredibly low mortgage rates (below 4%).
- Rising Home Prices: Home prices have skyrocketed over the past 50 years, more than doubling relative to median household income.
Despite this massive wealth, only a small percentage (9%) of Boomers plan to use their home equity for retirement.
The Future of Housing Finance
Freddie Mac’s senior vice president, Sonu Mittal, emphasizes the importance of maintaining the current housing finance system to support both Boomers and future generations. The system, he argues, has clearly benefited the Baby Boomer generation.
Disclaimer: This information is for general knowledge and shouldn’t be considered financial advice. Always do your own research before making any financial decisions./p>
