Generational Wealth Distribution and Homeownership Rates

 

For this article, I want to build and guide you through an argument for how age and generational gaps are playing out in affecting real estate trends. To do this however we need data which is not available on the Ugandan or African market leaving me with the option of the US and UK. So for arguments sake, we will be using data for the US market which I will subtly tie back to the trends we are observing.

As of 2023, the distribution of wealth among U.S. generations was notably uneven:

• Baby Boomers (born 1946-1964): Despite comprising only 20% of the population, they held approximately 52% of the nation's wealth.
• Generation X (born 1965-1980): This cohort possesses about 28% of the country's wealth.
• Millennials (born 1981-1996): They account for roughly 6% of U.S. wealth.
• Generation Z (born 1997-2012): Currently, hold a smaller share of wealth due to their age but are projected to become the wealthiest generation by 2035, potentially amassing $36 trillion in income.

Amazing stats, aren’t they. It’s no surprise that the oldest generations have the largest share of wealth but as times change this is projected to change due to events like succession and technology advancements. Let’s keep going:

Homeownership rates also vary across these generations:

• Silent Generation (born before 1946): Approximately 79% are homeowners.
• Baby Boomers: Around 76% own homes.
• Generation X: Approximately 69% are homeowners.
• Millennials: About 48% own homes, reflecting a slower transition into homeownership compared to previous generations.
• Generation Z: Although still emerging in the housing market, they accounted for 13% of U.S. home mortgage applications in 2024, up from 10% in 2023, indicating a growing interest in homeownership.

What I want us to note here is that the percentage dropped drastically for millennials who over the years have shown more inclination for lifestyle like remote working, hybrid and renter culture, co sharing and the likes. Generation Z are now coming of age for homeownership and have indicated interest in owning home but the key here is in which type.

As you go through the generations, you notice trends a more conservative use of space meaning individuals require less space to be comfortable. Tis might also be because it’s becoming more expensive to own home no doubt but the second part is the inclination to leave in multi dweller units as sentiments of community, and co spaces increases even in the workplace.

So it looks like Generational shifts in attitudes and economic circumstances have significantly influenced real estate trends, here is a summary of the changes:

• Baby Boomers: Having benefited from post-war economic prosperity, they invested heavily in real estate, often purchasing larger suburban homes. As they age, many are downsizing or relocating, influencing the availability of larger properties in the market.
• Generation X: Balancing careers and family life, they prefer suburban areas with good schools and amenities. Their peak earning years have enabled them to invest in real estate, contributing to property value appreciation in desirable neighborhoods.
• Millennials: Facing economic challenges such as student debt and the 2008 financial crisis, they delayed homeownership. However, as their financial situations improve, there's a noticeable shift towards purchasing homes, often favoring urban areas with access to work and social amenities.
• Generation Z: Digital natives with a strong emphasis on flexibility, they are entering the housing market with unique preferences. Despite current financial challenges like debt and high living costs, their digital fluency and educational attainment are key advantages for future wealth-building.

So what can we draw out of this discussion:

The impending "Great Wealth Transfer," estimated at over $100 trillion, from Baby Boomers to Millennials and Gen Z, is poised to reshape the real estate landscape. This substantial inheritance could enable younger generations to invest more heavily in real estate, potentially driving demand for diverse property types. However, wealth distribution is expected to remain unequal, with the wealthiest 10% likely to inherit the majority.

Real estate professionals should monitor these generational trends to anticipate shifts in housing demand, preferences for property types, and emerging markets. Adapting to the evolving needs of each generation will be crucial for sustained success in the industry.