No, they will hold onto them as rentals or sell them to the various VC-backed rental companies. Houses are not shelter, they are investments, and no one walks away from something that valuable.
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Yes, a large part of the reason the post title seems wrong to me – many already-debt-burdened millenials will NOT be able to buy homes soon, no matter what boomers who have homes do with them.
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Depends where they are, I suspect. The vast majority of homes in the U.S. surely are merely shelter. And to the extent that they’re also investments, not very good ones, given the huge amount of money that’s almost always paid to a bank that holds a 30-year mortgage on the home.
And thus a bank is its real “owner” for most of the time that anyone lives in it – which has long struck me as sadly funny when people say they own their own home – no you don’t, a bank does! Oh, wait, I guess that does make most homes investments: for banks and other lending institutions. 
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Millenials can’t afford homes. There is no job security, and the local economy is precarious. Most of my friends have moved multiple cities in the past three years, juggling part time positions and side hustles.
Eat the rich.
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I can only speak to the overheated coastal cities where rental homes are hollowing out the communities people moved here for.
I take your point on ownership of a home but I am more convinced the real problem is ownership of land. Why buy the land your home sits on when you could rent it. After all, you pay taxes on it: why not let those be your rent and let it stay a community-owned asset? “But mah wealth generation…” I hear from the box seats. Yes? At the expense of everyone else?
To your point…supposing you buy a $500,000 house and land, of which the house and land are each valued at $250,000. You are financing both, and the bank is making money from financing that land, each and every time it changes hands. The owner makes something but the bank makes more.
If you didn’t own it, merely rented, what would change? Would someone steal it while you were at work? Would someone make a claim? No one does that now.
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My Son and his 3 friends created a Tenant In Common [see below], and bought a 6k sq. ft. gaudy as hell mc’mansion w/ close to a half an acre land in Phoenix, no HOA, where they all have good tech jobs. The home was divided into 4 dwellings with one huge common area for get togethers. The conversion [approx. 1300 sq. ft. per unit] was done by a licensed contractor with each unit having its own metered utilities, kitchen, laundry, 1 bedroom, 1 & 1/2 baths, and garage parking. They each make their own mortgage payments as well, and the payments are equal too. I’ve yet to detect a flaw in this plan as they have all known each other since grade school.
These types of properties are pariahs on the market for up to 3 years in some cases, with the right situation, with the right folks, it just may be a good choice…
Tenants In Common Definition: Share a specified proportion of ownership rights in real property and upon the death of a tenant in common , that share is transferred to the estate of the deceased tenant . Related Terms: Joint Tenancy, Co-ownership, Tenancy By The Entireties.
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With massive inequality the top 10% buy most of those houses even if they do get a bit cheaper. And then rent them to the bottom 70%.
Always demand from the rich to own the land. They like it as a reliably valuable thing. If they have all the money they will also have all the land.
*top 10% because the top 1% usually don’t care enough to own individual houses. They own all the commercial and industrial property and actual apartment buildings… but that’s already true.
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Sounds good. The potential flaw is what happens when one of them wants to leave, has a divorce, etc. There is a long history of communes, and I think most of them eventually break up because of vaguely that sort of thing. Still it doesn’t have to last forever to be good, imo.
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And that’s the thing. These sorts of predictions only every hold regionally. If they come about at all. There are plenty of places in the US where you can buy a shockingly cheap home. Problem is they’re collapsed rust belt areas, poor neighborhoods lacking infrastructure, and generally speaking places without enough jobs (or variety of jobs) to attract new residents.
Where I’m living at is where some of those retirees like to “downsize” to. Its an area where the primary economy is based in tourism, and increasingly wealthy people’s desire for 2nd, 3rd, and 4th homes dictates home prices. When the older seasonal residents pass, and if boomer home owners leave. It won’t be “millennials” who can’t currently afford homes who snap up all those houses. It’ll be already well off people, who already own a home picking up a 2nd, or moving to their dream beach/country house. Typically after their kids leave for college. Retirees from nearby cities. And increasingly, large Air BnB operations that buy up whole neighborhoods and rent them out for a few weekends a year at a price of (no shit) $500 per person per night.
And as with the predictions of coming rent crashes in major cities we hear about every year or so (and so often from Cory), I’ll believe it when I see it. This is like the millionth time I’ve seen something about how this boomers go by by driven housing shift is just around the corner.
And 2 weeks ago I caught something on the news about how the retirement/over 55 housing business is deeply struggling. They built all these massive nursing homes, and retirement communities all over on the expectations that boomers would be snapping such places up left and right starting about 10 years ago.
But those people aren’t interested. Apparently the generations in question aren’t into older ideas of what a downsized retirement home should look like, and of course the Great Recession sapped a lot of their retirements. Leaving them without the funds to do so. So there’s a massive glut of vacant retirement housing on the market. With some being converted into millennial friendly nonsense like “coworking spaces”. Next to golf courses. Miles from a city or the businesses and people such things target.
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Tenant In Common allows for a partial split / sale each unit, hence the TIC document, they essentially are condos, kinda.
But yes, nothing lasts forever…
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Saying that the best thing for everyone is to rent is an idiotic stance.
It makes sense for some people and in some markets. But there are a lot of circumstances where it is the best option, and the best choice.
I mean, landlords don’t work for free- they take a profit. And they have all the expenses a homeowner must have. (Yes, they may not have mortgage, but they still have cost-of-money expenses.) This shows that under at least some conditions owning a house is cheaper than renting.
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The boomers will leave record amounts of wealth to their descendants.
This is, unfortunately, my plan for getting out of debt, as long as my parents don’t have to spend it all on healthcare before the end. I’m just a handful of years younger than Cory. My brother-in-law is at the young end of the Boomers and despite having one of those good-paying jobs at a factory that was literally visited by the President and bragged on by him, he was broke, too, and paid off his debts when his mom died. There’s a reason why “debt slave” is a thing.
I know it’s a first-world problem, but yeah, when you spend for your income and end up in debt anyway for something stupid like a healthcare provider hoarding bills until Christmas, it kinda sucks.
EDIT: Added a detail.
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Data are poor
Skin. Crawling. Nails on a chalkboard.
I hate to say this… if older people die a relatively quick, clean death, then their wealth is passed on to later generations.
If someone dies of a long illness, then their descendants get roughly nothing. A nursing home basically costs everything you own - including your house, retirement savings, and belongings.
Oh, and my Grandmother had a life policy that paid out for nursing home care. It honestly was more of an annoyance than anything because it paid for roughly one day a month, but my dad had to fill out the paperwork to take her off assistance and put her back on it three days later once a quarter when it paid out and her bank account was above the limit…
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I’m not sure so sure Millennials will be able to buy a home soon?
Thanks to Baby Boomers…
- Millennials are up to their ears in student loan debt. A debt that’s practically impossible to escape.
- They were told any college degree equals a great high paying job [like the Baby Boomers had], but many jobs & companies have been outsourced. Hey, I love to read medieval tomes like Beowulf as much as anyone else, but their just isn’t many job openings for teaching that.
- Today’s jobs offer lower wage/benefit. Or they’re working multiple part-time jobs or ‘gig’ economy jobs
- Pension? That’s for public sector union people. Instead private sector Millenials get a 401(k) where companies match 3 or 5 percent, if a match is offered
- And even if they can buy a house, the property taxes are obscene because public sector Baby Boom union members are getting fat pensions.
- Millenials are paying higher State and Local Property Taxes than Baby Boomers did. Boomers also had a decent chance to escape paying Social Security taxes for the full year. Boomer also payed a lower Social Security tax rate.
- They’re being hit on all sides; income, savings, purchasing power after taxes
Who remembers Douglas Copland’s Generation X?
In a scene in which Dag recounts quitting his job at a marketing firm, he tells off his ex-hippie-now-yuppie boss Martin. “Do you really think we enjoy hearing about your brand new million- dollar home when we can barely afford to eat Kraft dinner sandwiches in our own grimy little shoe boxes and we’re pushing 30? A home you won in a genetic lottery, I might add, sheerly by dint of your having been born at the right time in history? You’d last about 10 minutes if you were my age these days, Martin. And I have to endure pinheads like you rusting above me for the rest of my life, always grabbing the best piece of cake first and then putting a barbed-wire fence around the rest.”
Sorry folks, the Baby Boomers sucked us dry and they’re not done yet.
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PS: I’m at the tail end Baby Boomer. Who remembers 1980’s “right sizing” where members of the pre-Boomer generation were pushed out? I fully expect that occur to me one day courtesy of a Millenial…
Data is the plural, so prescriptively “are” is correct.
It may not be common usage, but it’s not wrong.
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The peak year for Baby Boomer births in the US was 1960. That group will not be retiring or giving up their homes for many years unless the floor plan no longer accommodates their infirmities more and more will live out their lives in the homes they are in because there simply are not downsizing alternatives. Ironically, the first baby boomers turned 65 in 2011 the depths of the Great Recession. That was eight years ago and the housing shortage continues to this day in spite of 9,000 boomers turning 65 every day. The free lunch of 2008 to 2102 is gone and may not be repeated for a generation.Articles like this have come out at the peak of every housing market and when the markets collapse, which they all do, thy public ignores the opportunities. Advice for millennials is to lower your expectations. Buy a house no matter what and let it appreciate.
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Don’t forget immigrant labor !
shesh! hurry up an die. Maybe the millennials will camp outside days in advance of our deaths.
