The Great Wealth Transfer: How $84 Trillion is Shaping the Housing’s Future

In recent years, we’ve been witnessing a monumental shift in how wealth is distributed across generations. This shift, known as the Great Wealth Transfer, is set to be the largest and most significant in history.

Historically, transferring wealth from one generation to the next was a slow and modest process, primarily involving smaller inheritances or family savings. But today, the landscape is changing dramatically. As highlighted in a recent Bankrate article:

 “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.”

So, what’s driving this massive transfer of assets? As Baby Boomers retire, sell businesses, or downsize their homes, they’re passing down significant wealth to younger generations. This shift is expected to create a powerful ripple effect that will continue over the coming decades.

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 major concern for many prospective buyers, particularly in high-demand areas. However, the increase in generational wealth is expected to help alleviate some of these challenges. As more assets are handed down, future homeowners will have greater financial resources at their disposal.

Merrill highlights this potential benefit:

“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.”

Though affordability remains a challenge in today’s housing market, the ongoing Great Wealth Transfer is set to unlock new opportunities for buyers and sellers alike. As wealth is transferred and utilized, it’s expected to ease some barriers to homeownership.