The Fun-Money-Generation

The last time I put on a pair of pants to discover $100 left in one of my pockets, what did I do? I spent it! It was 'fun money', unexpected, and why not blow it on something? I've felt the same way when my accountant reveals I'm due a refund from the IRS (rarely!). Over $82 TRILLION will transfer from older to younger generations in the US over the next 20 years.....that is over $4 trillion of stimulus PER YEAR.....EVERY. SINGLE. YEAR. FOR. THE. NEXT. 20. YEARS. A lot of this money - not all of it - is more concentrated amongst the wealthier with assets and savings....and homes.

I know I've spoken about this subject several times over the past few years, but I feel it's essential for this to sink in. REALLY sink in. We saw the impact on real estate pricing when trillions of dollars were injected into the US economy during the COVID era, lots of it for survival......what happened? Supply shrank and prices soared. If you're seeking out the most potent group of 'next wealth', a demographic that stands to benefit from a level of stimulus never witnessed in history, look no further than those aged in their mid to late forties.....Gen-X-ers..... Over the next 10 years, 1.2 million people worth at least $5 million will transfer an estimated $31 trillion to their heirs and about two-thirds of that extraordinary amount of wealth - or $19.9 trillion - is forecast to be passed on by 2033 by about 155,000 individuals with a net worth of $30 million or more according to research firm Altrata. That is MULTIPLES of the amount of stimulus spent on ALL Americans during COVID that many attribute to spiking inflation.....concentrated in a much, much smaller group, mostly wealthier already.

Yes, luxury market pricing could grow well beyond our imagination. What might this do to luxury real estate? It's very possible that we're about to enter an era of RUNAWAY Luxe-flation. The ability for markets to keep up the supply for this growing demand is almost certain to trigger massive price hikes. That $1,000 per night hotel room that is now $1,750 per night could easily go to $3,000. That $50 million Palm Beach mansion that now sells for $100 million could become a $250 million mansion. Yes, luxury and ultra luxury markets will see massive infusions of capital - as will capital markets - that may result in lowered buying power per dollar as prices soar.

If this capital infusion is not limited to luxury?markets and spreads into other markets that simply cannot afford the higher prices, we may have a problem. Sadly, the pressures for less-wealthy people to squander their money on things that buy them perceived status keeps growing. If builders focus more on more profitable, more expensive properties, everyone else will suffer the?consequences too. We need to watch this closely....