In recent years, there’s been a major shift in how wealth is passed between generations, known as the Great Wealth Transfer.
Traditionally, transferring wealth from one generation to the next was a gradual process, often involving smaller inheritances or family savings. But today, the scale has grown significantly. As a recent article from Bankrate explains:
The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.”
As more Baby Boomers retire, sell businesses, or downsize their Triangle Area homes, substantial assets are being transferred to younger generations. This creates a powerful ripple effect that will continue over the next few decades. The graph below uses data from Merrill and Cerulli Associates to show how much inherited money is expected to change hands through 2045:
Impact on the Housing Market
One of the most immediate effects of the Great Wealth Transfer is on the housing market. Home affordability has been a concern for many aspiring Raleigh homebuyers, especially in high-demand areas. The increase in generational wealth is expected to ease some of these challenges by providing future homeowners with greater financial resources. As assets are passed down, buyers may find themselves better positioned to afford homes. Merrill highlights this benefit in a recent article:
While millennials face steep barriers . . . to buying a first home in many markets, ‘that’s a for-now story, not a forever story’ . . . The Great Wealth Transfer should enable more of them to become homeowners — or trade up or add a second home — either through inherited property or the funds for a down payment.”
Impact on the Economy
But the Great Wealth Transfer doesn’t just impact housing. It’s also opening new opportunities for entrepreneurs to fuel economic growth. For those looking to start a business, receiving these funds can provide the necessary capital to launch a new company. This helps the next generation of innovators and business owners bring their ideas to life.
While affordability remains a challenge in today’s housing market, the ongoing Great Wealth Transfer is poised to unlock new opportunities. As wealth is passed down and utilized, it’s expected to ease some barriers to homeownership and spur other entrepreneurial endeavors. Contact Linda Craft Team Realtors today to explore how these changes can help you achieve your real estate goals.