> old people predominantly aren't buying new homes
What do you mean exactly by buying new homes?
Obviously the average length of home ownership for the oldest group would be much longer than for the youngest age group. How new were their homes when they were first purchased, and has that number changed over time? I have no idea. But if the value of older homes is increasing, it means that someone is purchasing those older homes.
> or investing in new equities
If I'm reading the tables right, it looks like the oldest group received their largest jump in net worth during 2019-2022 and actually did worse than all other groups in 2016-2019.
I mean that older people have a longer duration of time in their current residence. Their homes have had a longer time to appreciate.
> If I'm reading the tables right, it looks like the oldest group received their largest jump in net worth during 2019-2022 and actually did worse than all other groups in 2016-2019.
I didn't dig into it too much, but the SP500 did better during the former period.
> Their homes have had a longer time to appreciate.
A home doesn't inherently appreciate over time, like a fine wine. Aside from remodeling, the only thing that increases the value of a home over time is increased demand for homes relative to supply, which was my original point: "the price of housing has increased significantly."
> Aside from remodeling, the only thing that increases the value of a home over time is increased demand for homes relative to supply
And it's important to note that a highly significant factor on the demand side is the availability of mortgage loans at low rates because the government prints money to fund them.
And a highly significant factor on the supply side is many highly desirable localities intentionally restricting the supply of housing.
Banks and Fannie and Freddie only "create money" to the extent the Fed allows them to. They all have accounts at the Fed, and those accounts govern how much money they can issue as loans. So ultimately the money printer only belongs to the Fed. The fact that what is actually going on is obfuscated by several layers of indirection is a bug, not a feature.
Correct, but in aggregate, (which is what all of these numbers are) they have.
> the only thing that increases the value of a home over time is increased demand for homes relative to supply, which was my original point: "the price of housing has increased significantly."
At the risk of sounding obvious, yes, the value of housing is directly derived from how the market prices it.
When housing prices go up, the net worth of the people who own housing goes up. Most of the time, the prices have been going up. So the people who have the most time in the market are the most to benefit. When boomers were having children, the median home was around $100k. The average boomer who bought a home on a 30yr mortgage, had kids, and is now retiring, has $400k equity.
> Most of the time, the prices have been going up.
That's not particularly interesting though. The rate at which prices go up is crucial, especially in comparison with wages. If the price of housing increases faster than wages, then home buyers will end up with less disposable and investable income than before.
We're not talking about why older people are wealthier than younger people. We're talking about why the gap has increased.
Well, any group that owns more of an asset class will experience more of whatever swing in value it experiences, right? Isn't it as simple as that? 80% of boomers have a house, and only 55% of millennials do. If all homes go up by 100%, the average boomer will have 80% more wealth, and the average millennial will only have 55% more wealth. The gap in their wealth will increase.
Some of them do. Wage earners are not necessarily cash flow positive nor putting money toward hard assets. Plenty of people out there are renting, spending, and not saving. IIRC there's also a good bit of evidence to show that later generations are not saving nearly as much as older generations.
The price of renting is not unrelated to the price of buying. If homes are too expensive or unavailable for purchase, then the rental market will experience high demand, because people have to live somewhere. Buyers and renters may be cash negative for the same reason.
What do you mean exactly by buying new homes?
Obviously the average length of home ownership for the oldest group would be much longer than for the youngest age group. How new were their homes when they were first purchased, and has that number changed over time? I have no idea. But if the value of older homes is increasing, it means that someone is purchasing those older homes.
> or investing in new equities
If I'm reading the tables right, it looks like the oldest group received their largest jump in net worth during 2019-2022 and actually did worse than all other groups in 2016-2019.