Are you wondering if our local housing market could maintain current pricing – or even go higher? It’s possible, and if it happens, a major reason will be baby boomers pitching in to help their kids buy a home.
Compare the 2018-2022 era to what’s expected to happen over the next 20 years (chart above).
And then there’s this:
It’s hard to determine exactly how many buyers are receiving help from their parents, in part because few are willing to discuss how they’re paying for a new home. But financial advisors say they’ve seen a wave of ultra-wealthy parents seeking advice on buying homes for their kids because of the increased gift and estate tax exemption.
The Tax Cuts and Jobs Act doubled the amount that Americans can pass on to heirs tax-free, to about $12 million for individuals and $24 million for couples in 2022. It will sunset at the end of 2025, when the exemption is scheduled to be cut in half.
It’s not just for the ultra-wealthy either. Every homeowner has picked up enough additional home equity lately that they might find a way to tap into it to help out their kids:
Unfortunately, the generational wealth transfer will do nothing to add to the supply of homes for sale – it will only create more demand of affluent buyers playing with money that’s been given to them.
The Fed will be forced to keep trying to control inflation, and Rob Dawg thinks mortgage rates will get as high as 7.25% (and they could go higher). It will cause an uncomfortable frenzy-transition period because the longer it takes, the more money will be inherited. Yikes!
How long will people wait-and-see?
Get Good Help!