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Welcome, Future Early Retirees.

People love to try and predict when the next crash is going to occur to point where its laughable. There is a running joke Robert Kiyosaki, author of Rich Dad Poor Dad, has predicted 10 out of the last 2 recessions. But in all seriousness, one of the biggest problems millennials and Gen Zers face today is being able to buy a home. Prices have risen way above the rate of inflation and parents wonder if their kids will be able to buy a home. The good news is I have hope to offer in regards to the future of house prices.

In today’s newsletter:

• Share Money Bags 💰

• The next crash

• What should I do today?

• Weekly Trivia ❓

• Things I found interesting

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The next crash

I believe in the next 10 to 15 years, a significant shift in the housing market will occur, driven by demographic changes unlike anything we've seen before.

The Demographic Turnover

Baby boomers, those born between 1946 and 1964, currently own approximately 38% of America's homes, equating to about 32 million properties. As of now, the oldest boomers are in their late 70s, aligning closely with the average U.S. life expectancy of 77.5 years. This alignment foreshadows a massive transition in property ownership.

Inheritance and Market Saturation

A portion of these homes will be passed down to the next generation. However, not all boomers have people waiting in the wings. Data from the U.S. Census Bureau indicates that around 16.5% of baby boomers do not have children. This means a significant number of properties will not be inherited but will instead enter the market directly or through estate sales.

Even for those boomers with children, there's no guarantee their children will want or need to occupy these homes. Many might already own homes elsewhere or prefer different locations, leading to these inherited properties being sold off.

The simultaneous release of these properties into the market would lead to an huge increase in supply, triggering a crash.

This increase will not happen overnight but will gradually unfold over the next decade or more.

While real estate markets are influenced by a variety of factors, the demographic shift involving baby boomers presents a clear and present dynamic that could significantly reduce home prices. This isn't just a market correction but potentially a reshaping of the real estate landscape as we know it. The dream of owning a home will be more of a reality than the grim landscape of today.

What should I do today?

Whether the next housing crash is in two years or fifteen, preparation is key for both homeowners and prospective buyers. Here's how you can ready yourself:

• Maintain good financial habits: The purpose of establishing healthy financial habits is to fortify your position against economic downturns. Sticking to a well-structured budget and maintaining an emergency fund allows you to navigate through financial crises, like a housing market crash, with minimal stress.

• Don't let uncertainty stop you from buying today: Unlike the dramatic crash of 2008, I expect the next downturn to bring balance rather than chaos. If you find a home that meets your needs and budget, don't let the fear of a 'crash' deter you. Real estate should always be viewed as a long-term investment where you will own the home for 5 to 10 years minimum. Prices might dip, but historically, they recover and appreciate over the long-term (10 years plus).

• Understand the effects: The impact will likely be different depending on the region you live in. Urban areas or regions with good schools, steady flow of jobs or popular tourist attractions likely offer more resilience and a quicker recovery post-crash compared to more rural or economically stagnant areas, where the price drop could be dramatic.

• Calm 🧘‍♂️: Keep an eye on economic indicators like employment rates, interest rates, and housing inventory. However, avoid panic induced by sensational news. Economic cycles are normal, and being prepared rather than reactive is beneficial.

• Opportunity for Younger Generations: If you're part of the younger demographic, this could be your window. A more balanced market means less competition from investors and more negotiating power for first-time buyers. Start educating yourself on home buying now, so you're ready to act when opportunities arise. As I mentioned above though, don’t let uncertainty stop you from buying today if you are able to.

Corrections are not the time for panic but for prudent planning. By keeping good financial habits and maintaining a long-term perspective, you can navigate through or even capitalize on the shifts in the housing market.

Thank you for reading!

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Weekly Trivia ❓

Things I Found Interesting

• US moves to ban cars with Chinese tech

• Smart glasses, headsets, and AI will take center stage at Meta Connect 2024

• Can Costco solve CA’s housing crisis?

• Fortune 100 Best Companies to Work For in 2024

• Top 5 regrets people have on their deathbeds

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Talk to you all next Wednesday 🙋‍♂️