Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
For years, economists and members of older generations have been concerned that millennials would become part of a generation permanently left behind financially. Although many millennials are struggling to establish themselves economically, a significant number of their contemporaries have been growing their wealth at an astonishing rate. Benzinga looks at who they are, what they’re doing and why it’s working.
Check It Out:
A recent article in the Wall Street Journal revealed a surprising trend: Today’s millennials are wealthier than previous generations at the same age. The article relied in part on research from the St. Louis branch of the Federal Reserve, which showed that the median household net worth for millennials born in the 1980s surged from $90,000 in 2019 to $130,000 in 2022.
The St. Louis Fed also asserted that as of 2024, millennials had accumulated 25% more wealth than baby boomers and Gen Xers at the same age. Those stats are also adjusted for inflation. It represents a stunning turnaround for a generation many economists feared was destined to be financially adrift. Ana Hernandez Kent, a senior researcher with the fed, said that the generation she feared was “lost” has “been found.”
The irony of millennials having accumulated so much wealth so quickly is matched by the fact that this generation, born into the digital age, has employed the same wealth-building method as previous generations: buying real estate. Specifically, the millennials who purchased homes or investment property between the Great Financial Crisis and COVID-19 got locked in at low interest rates while their properties appreciated rapidly.
This has allowed them to grow substantial wealth. The Fed study found that the combined wealth of millennials has grown by $2.5 trillion when the value of their homes is included. Other millennials who made aggressive contributions to their retirement funds as young employees have also seen the value of their retirement portfolios increase dramatically.
Trending Now:
This is not to say that the picture is perfect. There is an increasing bifurcation in millennials’ economic fortunes based not just on their status as homeowners but also on when and where those homes were purchased. Jean Twenge, who teaches psychology at San Diego State University, framed the question like this when talking to the journal: “One of the biggest wealth divides, especially for millennials, is did you buy a house in 2020 or before, or after? Or not at all?”
Even the millennials fortunate enough to have bought before 2020 report a certain level of unease. Between 9/11, the Great Financial Crisis and COVID-19, they have come of age in an era of increasing political and financial instability. Having assets is a blessing, but it does raise concerns among the “lucky” ones about whether they can keep it all together.
One couple profiled in the Wall Street Journal article said bluntly, “Deep down, we kind of fear that one day things can fall apart.” Young homeowners have always shared these fears. However, the millennials who aren’t fortunate enough to call themselves homeowners fear they may never be able to. This is a legitimate fear, depending on their earning potential and where they live.
That said, one thing is oddly reassuring about the current situation. Even in this age of AI companies, chipmakers and tech stocks dominating the investment landscape, the centuries-old strategy of buying real estate is still paying off. The key question facing America going forward is how to get more members of every generation into the homeowner’s club.
You Can Profit From Real Estate Without Owning Property
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields and you don’t have to own property to do it…
The Arrived Homes investment platform has created a Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.
Don’t miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield offerings.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
This article The Real Estate Fueled Rebirth Of Millennials’ Financial Prospects originally appeared on Benzinga.com