Yahoo Autos You may hate high interest rates and home prices, but many boomers have reason to celebrate
High home prices and interest rates have created many challenges for young Americans.
But the boomer generation has fewer reasons to complain.
Many have benefited from high home prices and bond yields and are less hurt by the economy's cons.
Buying a home in the US is less affordable than it's been in decades, but many older Americans are benefiting from the economic environment.
According to the National Association of Realtors, US mortgage affordability is at the lowest level since at least 1989. As of June, the median American had to spend over 43% of their income to meet a mortgage payment on the typical US home, according to the Atlanta Fed, the third-highest monthly figure since 2006.
These trends have been driven by the combination of high home prices and interest rates. This month, the median US monthly mortgage payment hit a record high of over $2,600. In the second quarter of this year, over half of the US housing market saw record price increases. At the same time, the 30-year fixed mortgage rate is near a two-decade high, in part due to the Federal Reserve's campaign to raise interest rates and cool inflation.
If you're a young, aspiring first-time homebuyer, these developments may sound dismal. But if you're a member of the baby-boom generation, the youngest members being about 60 years old, there's a good chance you have fewer complaints about high home prices and interest rates.
Of course, many older Americans are also struggling in today's economy, but high prices and rates are generally more advantageous to them than to younger generations. Insider breaks down the reasons below.
Rising home prices increase the wealth of existing homeowners
For the roughly 70% of US 18- to 29-year-olds who didn't own a home as of 2021, per the Federal Reserve, high prices might've made homeownership feel unattainable. First-time buyers accounted for just 26% of US home purchases last year, according to the National Association of Realtors, the lowest share since data collection began in 1981. By pushing up the number of renters, high home prices help keep young Americans' rent prices high.
For many older Americans, however, high home prices have been a boon to their finances.
As of 2021, 84% of Americans ages 60 and older owned their home. The rise in housing prices over the past few decades — and especially the past few years — has helped boomers accumulate more real-estate wealth than any other generation, a New York Time analysis of Fed data found.
As of the first quarter of this year, boomers held about 53% of total US household wealth, the Fed said. While many Gen Xers and millennials have bought homes over the past decade, they held only 28% and 6%, respectively — partly because they haven't had as much time to see their home values grow.
