How Many Millennials Will Be Rich Enough to Buy the Boomers’ Millions of Unaffordable Bungalows? By Charles Hugh Smith

If you’re thinking about retiring and living off the proceeds from your house and investments, you may want to sell sooner rather than later. From Charles Hugh Smith at oftwominds.com:

Absent demand from tens of millions of wealthy, high-income buyers, asset valuations will fall as Boomers sell off assets to fund their retirement.

There’s a peculiarly flawed logic behind the widely held view that the Baby Boomers will seamlessly transfer tens of trillions of dollars of their wealth to the Gen-X and Millennial generations as they exit stage left. This is flawed for a very basic reason: the extremely overvalued assets that will be transferred–real estate and stocks–only reached such extreme overvaluation because there is a surplus of buyers who are sufficiently wealthy (and willing) to pay bubble-inflated prices.

Since the ownership of both real estate and stocks is concentrated in the hands of the wealthiest 10% who tend to be older, how many Gen-Xers and Millennials have the means to buy million-dollar bungalows and overpriced portfolios? If buyers are scarce due to entrenched wealth-income inequality, then once Boomers start selling their vast holdings of stocks and millions of overpriced homes, prices will plummet if sellers outnumber qualified and willing buyers.

In other words, the bloated valuations Millennials hope to inherit will only remain at the currently overvalued levels if millions of qualified buyers emerge to snap up every Boomer bungalow at today’s bubble prices. If there are fewer buyers than sellers, prices will decline accordingly.

Younger generations hoping to inherit million-dollar McMansions and stock portfolios overlook that many aging Boomers are planning to sell their stocks and homes to fund their retirement. Boomers who are wealthy on paper are wealthy due to their ownership of stocks and real estate; they need to liquidate these assets to afford to retire at their desired level of comfort.

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