A seismic wealth transfer is set to shake up America’s high-end housing market.
Gen Xers and millennials are set to inherit nearly $2.4 trillion in US real estate over the next 10 years, according to a new report from brokerage Coldwell Banker Global Luxury.
Graying generations of baby boomers have spent decades accumulating a historic pool of private wealth. Americans 60 years of age or older today possess almost two-thirds of US wealth — a marked uptick from just a decade ago, when this cohort owned less than half of the pie.
Older Americans with net worths exceeding $5 million are expected to pass down more than $17 trillion over the next 10 years, according to the data, first reported by the Wall Street Journal.
This change-over has been dramatically dubbed the “Silver Tsunami,” and it’s coming for the high-end real estate market.
Nowhere is that “Silver Tsunami” more powerful than in the US, where roughly 52% of all global real estate activity is expected to be concentrated over the next decade.
Brokers, attorneys and wealth managers told the Journal that the wave is already having an impact on the country’s luxury housing market, as wealthy families snap up real estate assets ahead of parents’ deaths and accompanying inheritance taxes.
That includes dynastic families securing homes for their children in South Florida enclaves and Manhattan brokers catering to the modern tastes of demanding trust fund kids.
As the wealth transfer accelerates, sprawling legacy properties are getting passed over, too, bringing more multi-generational estates onto the market for the first time this century.
These historic family retreats hitting the market require extensive, and increasingly costly, upkeep and shared management that some heirs are unwilling to take on, or unable to buy out their siblings.
New York City Compass agent Ian Slater told the Journal that the generational turnover is sending NYC price tags soaring.
“I used to commonly see people buy $3 million to $5 million apartments for their 25- to 30-year-old kids. Now I see people buying $15 to $30 million apartments for their kids,” Slater told the outlet.
Manhattan’s younger crowd of spoiled heirs are shifting demand in its luxury market, insiders told the Journal, directing cash flows away from Upper East Side co-ops to sleek luxury condos in Greenwich Village and Tribeca.
As opposed to stuffy co-ops, newly constructed condominiums give high-net-worth families flexibility to buy behind LLCs and rent out the pads while their children are jet-setting.
Personal wealth and real estate investment in the US have grown in tandem since 2020.
Americans with a net worth over $5 million have seen their wealth grow by more than 58% over the last five years, according to the report. During that same time, real estate investment has charted a 59.9% growth.
While Gen X may be first in line to inherit, the report identified Millennials as the inheritors of the largest proportion of the tsunami’s spoils over the next 25 years.